Coronavirus impact on Uganda’s economy started in February – Report

Kampala, Uganda | THE INDEPENDENT | 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, March 2020 performance of the economy report states by 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% reduction in earnings compared to the previous month. Here, the country export earnings were USD 352.91 million (Shs 1.3tn) in February 2020, lower than the USD 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 on earnings compared to the same month a year ago. On the imports, the report says, they declined by 7% as both government and private businesses cut on their demand.

In February 2020, the country brought in goods worth USD 546.73m down from USD587.06 million in January.

Most of the imports were down: foodstuffs, beverages and tobacco (down by 7%), mineral products excluding petroleum (down by 7%), petroleum products (down by 8%), plastics and rubber items (down by 7%), textile and textile products (down by 6%), miscellaneous manufactured articles (down by 25%) and arms, ammunition & accessories (down by 76%).

The fall in exports and imports have implications in how much money can government collect in terms of taxes.

Less imports means government earns less on import duty, while fall in exports  means government doesn’t earn on incomes of exporters.

In March, government says it registered a revenue shortfall of Shs 278.67 billion. 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% from a pre-pandemic projection of 6%.

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.

******

URN