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Experts Concerned About Unutilized Shs 200 Billion SME Recovery Funds

Small and medium-scale enterprises are still experiencing an increase in the cost of production and inputs, even as COVID-19 is long gone. This is according to the results of a survey done by the Economic Policy Research Centre (EPRC) meant to among others assess business resilience to the effects of the COVID-19 pandemic.

Disseminating results of the study, Smartson Ainomugisha, a Research fellow at the policy think-tank said they surveyed 1229 businesses selected from across the country in 2021 but when they went back to check on their resilience in October 2022, they found 118 had closed down.

Small enterprises were most affected by the closure of both premises and operations, followed by micro businesses. For those that remained in operation and are still in business, the researcher says many have resorted to sourcing their raw materials locally.

He said that the cost of production is currently higher than the pre-COVID-19 time.

While the government earmarked money to the tune of 200 billion Shillings to help such businesses recover from the effects of the pandemic, by the time EPRC went back to the field in October 2022, only 16 billion shillings had been given out.

Reacting to the results of this survey, Francis Kabuye who heads policy at the Federation of Small and Medium Enterprises said that the government erred in the selection of financial institutions charged with giving out this credit. By this December, he says only 28 billion had been given out and to only ten enterprises.

He says the government needs to revise these channels if businesses are to be helped thrive suggesting entities like microfinance institutions that are more accessible.

However, apart from tackling costs, the EPRC recommends that businesses need to be helped formalize as some businesses were wiped out simply because they could transition to e-commerce.

Bob Twinomugisha, a senior Economist at Uganda Development Bank says initiatives that only focus on financing SMEs without offering advisory services will most likely not yield. For him, businesses should be offered money and be taught how to use it.

-URN

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