Coronavirus Impact: SMEs Appeal to Govt for Lower Interest Rates, Stimulus Package

Walugembe John, the Executive Director Federation of Small and Medium Enterprise

The body that brings together Small and Medium Enterprises (SMEs) in Uganda is appealing to government to lower interest rates as well as ease taxes to enable businesses stay afloat following the impact of COVID-19.

The business community in Uganda, like the rest of the world has been hit hard by the coronavirus outbreak, in the wake of travel restrictions which has cut supply from China where the virus originated.

But more impact is yet to be felt by smaller businesses with a reduction in stocks and sales, and with few customers since authorities are advising the public to stay home.

Walugembe John, the Executive Director Federation of Small and Medium Enterprise said on Wednesday that the  economic impact of this pandemic will be huge for the global economy, as well as, the Ugandan economy.

“SMEs,  in particular,  will de disproportionately affected  to: a disruption in their supply chains,  shocks to demand as people choose to stay home,  cash flow problems, to mention, but a few, ” Walugembe told reporters at a news conference.

He cited the travel, tourism, hospitality, entertainment and  manufacturing entities as those likely  to suffer the most.

He said government should consider boosting  liquidity for small businesses, at this time, through  backing an emergency low-interest fund from which small businesses  can borrow to meet their working capital and operational requirements during this period.

“The  Central  Bank could also  slash interest rates  to spur lending to the private sector Government  should offer tax relief to  businesses through lowering the VAT  rate for all businesses and offering  a grace period of 6-12 months for businesses  to pay their outstanding taxes,” Walugembe said.

He also proposed that  government offers individual income tax relief to boost consumer spending.

In addition, the SMEs says it is critical at this point that  government puts in place a comprehensive Coronavirus stimulus  package for businesses an consumers.

In the U.S. for example, the Donald Trump Administration is seeking a stimulus package worth a USD 1 trillion to assist the economy recover from the shocks caused by the virus.

Canada’s Prime Minister Justin Trudeau announced additional economic measures to help Canadians affected by the COVID-19 pandemic.

Trudeau said the government will spend up to $82 billion, including $27 billion in direct support for Canadian workers and businesses

Earlier this week, the private sector in Uganda’s tourism sector appealed to government to issue tax waivers to mitigate the loss these businesses are facing in the wake of the Coronavirus. Many businesses in hospitality could lay off over half of their staff.

Hoteliers appealed to government to give wavers (especially taxes) to the hospitality until the situation has normalized.

“We are requesting government through Bank of Uganda to put in place some mitigating measure either by reducing the interest rates or extending grace period for hoteliers. Those are some of the things that we the hotel owners association are proposing,” Susan Muhwezi, the Chairperson of Uganda Hotel Owners Association told reporters.

“Then, we want to also create a crisis management committee that will lead the recovery efforts in tourism industry. We have always had these epidemics but there is no committee to quickly mobilize in times of emergencies,” she said.

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