Covid-19: Fewer Ugandans Seeking Financial Services

More Ugandans are spending less money now as compared to January 2020 before the government moved to institute a lockdown to curtail the spread of Covid – 19.

According to a study conducted by Twaweza East Africa and Food Rights Alliance titled; Livelihoods under COVID-19: Livelihoods and inequality, there has been a sharp drop in the spending habits of Ugandans as more people find their income insufficient to meet their daily needs.

The drop suggests that the average daily expenditure of a Ugandan living in rural areas dropped from Shs 14,600 to Shs 10,300 compared to those in urban areas which dropped from Shs 13,100 to Shs 12,300.

The report is part of a series of impact assessments based on data from Sauti za Wananchi, Africa’s first nationally representative high-frequency mobile phone survey. The findings are based on data collected from 1,600 respondents across Uganda in May and June 2020.

Despite these increased pressures, more Ugandans are preferring not to seek financial support.

“Three out of eight Ugandans say they would not ask for help, compared to two out of eight who said the same in January. Among the rest who are more willing to ask for help, fewer of them would ask friends and more would seek help from family compared to January of this year,” the report reads in part

 According to the study report, asking family and friends for money is among a range of previously less-used options that are becoming slightly more common during the Covid-19 pandemic. Others include selling assets and seeking casual work.

Marie Nanyanzi from Sauti za Wananchi at Twaweza said more Ugandans need financial assistance than ever before.

“These data provide some early insight into a new economic order for Ugandans following Covid-19. The intensifying pressure on citizens’ ability to meet basic needs is clear. Important changes in people’s spending and financial management are already apparent – from quiet belt-tightening to growing unwillingness to ask for help from our neighbours,” she said.

Nanyanzi further added that “the data also reveals that, contrary to expectation, rural households are facing even greater financial strain than their urban counterparts. Without thoughtful and assertive intervention, all Ugandans may face even harder times ahead.”

According to the study findings, overall, 1 out of 10 Ugandans have received support in the last two months from government, NGOs or any other actors. Urban households are three times more likely to receive support than rural homes, which is in line with the government’s mitigation strategy for the economic effect of COVID-19.

Agnes Kirabo the Executive Director Food Rights Alliance (FRA) urged the government to come up with urgent mitigation measures to improve the country’s food governance systems.

“The data show the gap in Uganda’s food governance system; whereas household food security has been more resilient to shocks such as pandemics, national food security suffers under such shocks, weakening household food security further. Enhancing national food resilience requires a holistic approach with a well-defined and significant role for the state,” she warned.  

“Covid-19 serves to remind the government to put back food in its primary position as a national priority due to its significant role in macro-economic stability, human security, and national stability overall as well as, as an underlying determinant of other social outcomes such as health. Appropriate frameworks are required as a matter of urgency to govern food production, food trade and food consumption to ensure sustainability, stability and safety,” she added.

The pandemic has had profound effects on businesses, with many struggling to keep open. Many have laid-off workers as a cost-reducing measure.

The study findings show that Ugandans who don’t have work to return to, have no clear survival or coping strategy – most of them plan to ask family for help or to make use of food stocks.

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