A sobering analysis of Uganda’s businesses during coronavirus crisis shows that at least 100,000 formal jobs have been cut, revealing the scale of the carnage the virus has had on employment.
Also, at least 4.4 million workers in the informal sector will either see their earnings fall below the poverty line or dry up completely. This information is contained in an assessment by the United Nations Capital Development Fund, in which researchers asked business owners both in the informal and formal sectors on the prospects of surviving this crisis.
According to the survey, five industries; that is, accommodation and catering, mining and quarrying, manufacturing, culture, sport and entertainment, and wholesale and retail trade will lay off the highest number of people. The manufacturing sector will lay off at least 18,164 jobs, while the accommodation and catering industry, which lumps up tourism, will let go of 11,876 workers.
Agriculture, which was supposedly left open during the lockdown, will see at least 11,065 people lose their jobs. The sector didn’t work normally as demand for its products dried up and farmers could hardly keep care at farms. The wholesale and the retail sector, where most shops in arcades and shopping malls have been closed for the last two and a half months will fire 6,879 employees.
The financial industry, where we find banks, is expected to let go of 2,652 workers. All these workers are formally employed and the loss of jobs has a direct implication on taxes that the government can collect.
The impact on life is unmeasurable. Various studies have estimated that each employed person in Uganda has more than three more people that depend on them. The coronavirus pandemic has hit the entire globe but the businesses that will cut jobs say it is the only way they can survive.
The survey reports that most businesses (51.3 percent) said they were laying off workers because they “experienced a reduction of orders due to the lockdown measures” which effectively means they had little or no income. Also, some (38 percent) said they found it difficult to fund their operations. Others said the suspension of transport disrupted their operations.
The UNCDF study also sheds a spotlight on the actual revenue losses for critical sectors. For the formal businesses, the actual revenue losses will amount to 10 percent of GDP, which translates to Shs 12.8 trillion depending on how long the lockdown drags on.
Manufacturing still leads in revenue losses expected to top Shs 823 billion, the construction sector will lose Shs 809 billion while accommodation and catering will lose at least Shs 134.4 billion.
All these losses will happen in the 2020/21 financial year which is starting on July 1.
This brings out the fact that the pain of the pandemic will go on for a while before things get back to normalcy.
The study shows that companies that target the export markets said they expected their export volumes to drop by more than a half. Only 6 percent of companies expect their exports to increase.
Education institutions especially universities that target foreign students are also expected to fill the pinch. As the companies lay off workers and push to survive, many still see the government help as the only thing that will make a difference as to whether they survive or fold. The government has so far not been open on what it plans to do for the business community.
Even then, close to three-quarters of businesses (70.2 percent) said they don’t expect to recover until after three months after lockdown. Only 4.1 percent believe that it will take one month or less to get back to normal business. The bigger the company the higher the chances it will recover quickly.