By Ben Sebuguzi
Around 2018 when the price of maize had dropped by 75% ,Bank of Uganda came up with a nice wonderful stimulus package of Ugx 100bn to foster price stability of maize which had reduced to as low as Ushs200 under the Bank of Uganda Agricultural credit facility. This was a good intervention to help ordinary people like farmers.
However, during this covid 19 pandemic, Bank of Uganda has failed to come up with a tailored concrete and robust program to help prevent the closure of SMEs due to the pandemic. Forget about how they have managed to provide constant flow money in the financial systems because there they have tried. And also helping the appreciation of the shilling against the dollar, those they have tried,but I am talking about direct intervention of helping SMEs through setting up free “business clinics” to the public just like a wanainchi goes to Naguru hospital for free medical services.I mean these SMEs and informal sector have suffered the blunt of COVID19 yet there is no government agency that has really come down to listen to their challenges and give them recommendation to relevant organization for help.
According to the the new UBOS data, about 30% of the business closed shop and about 51% of companies reduced the salaries of their staff! This is a disturbing information to any economics analyst like me. It greatly affects livelihood due to unemployment. It also affects aggregate demand in the economy hence the whole eco systems.
Besides price stability and managing macro economics, BOU has a national payment system with the objective of financial inclusion and coming up with good private sector initiatives like the business clinics am recommending to them where business owners with challenges can meet a team of professional experts hand them their business prospectus for advice at a free cost. Then the experts can refer them to relevant agencies like UDB or any financial institution for help. They can recommend them to companies that offer higher purchase services etc. They can as well help them get in touch with good equity investors that can prevent them from battling with high interest loans.Sometimes they could advise the companies to improve their systems from linkages as some SMEs may not know that they are losing money. This is another way they can help salvage the economic devastation of businesses due to covid.
Businesses cannot be saved by holding only monthly press conferences of announcing reduction in interest rates,the situation can only be rectified if the BOU employees allow to put up their sleeves and go down to the ghetto as His Excellence the President Museveni put it. It is not just puffing cigars and drinking wine in tax payers Air conditioners, it’s about helping the small business owners who are not only the foundation of our economy with about 80% of economy,but they also support the big big multinational or large enterprises.
If BOU was able to donate about Ush 4bn of tax payers money to just one legal firm which advised them in fraudulent take over of Crane Bank in 2017, how about putting aside some thing about Ush 1bn one stop centre advisory business clinic!?
I also recommend that for subsequent hiring of staff,they should hire people with professional training and experience in SMEs because they are the engine of the economy of which bank of Uganda should base their operations. They should also hire people with a business perspective not the ones from the academic world only. We need many the Richard Byarugabas of today in order to be able to turn loss making entities that need annual recapitalization from the consolidated fund to profit making.
Ben Ssebuguzi is an entrepreneur, budding economist and Secretary general of Uganda Poor youth movement
