Uganda’s economy started feeling the hit from the Coronavirus (COVID -19) as early as February before the lockdown, a report has revealed.
According to the Ministry of Finance, Planning and Economic Development’s March 2020 performance of the economy report, by the start of February, external demand for the country’s exports had started to fall due to the virus. Imports also were declining as traders feared to order for goods from the then Coronavirus hit-China.
The report says “export performance was affected by falling external demand and trade disruptions following the Coronavirus outbreak.” Countries like China where Uganda imports and exports some goods had already put up restrictions to stop the spread of the virus.
The report notes that in February 2020 there was an 8.0 percent reduction in earnings compared to the previous month. Here, the country export earnings were $352.91 million (Shs 1.3tn) in February 2020, lower than the $383.62 million (Shs 1.4tn) recorded for January 2020.
Uganda has been under lockdown for the last three weeks, meaning very little economic activity was taking place. The impact of this is yet to be reported.
In February, the exports that registered a decline during the month included coffee, fish, tea, maize and beans. But there is a growth in earnings compared to the same month a year ago. On the imports, the report says, they declined by 7 percent as both government and private businesses cut on their demand.
In February 2020, the country brought in goods worth $546.73m down from $587.06 million in January.
Most of the imports were down: foodstuffs, beverages and tobacco (down by 7percent), mineral products excluding petroleum (down by 7 percent), petroleum products (down by 8 percent), plastics and rubber items (down by 7 percent), textile and textile products (down by 6 percent), miscellaneous manufactured articles (down by 25 percent) and arms, ammunition and accessories (down by 76 percent).
The fall in exports and imports has implications on how much money the government can collect in terms of taxes.
Fewer imports mean government earns less on import duty, while a fall in exports means government doesn’t earn on incomes of exporters.
In March, government says, it registered a revenue shortfall of Shs 278.6 billion. Ministry of Finance says the global and government’s response to the Coronavirus pandemic outbreak is expected to severely affect economic activities during the second half of the financial year.
Growth projection for 2019/20 has been revised downwards to 3.9 percent from a pre-pandemic projection of 6 percent.
Government says the pandemic has led to supply chain disruptions to manufacturing and trade activities, while travel restrictions will dampen key service sectors such as tourism and hotels.