COVID -19: Seventeen million Ugandans could fall into poverty

Kampala, Uganda | THE INDEPENDENT | As many as 15 to 17 million Ugandans will likely fall into poverty as the coronavirus (COVID -19) blockade takes a toll on the economy with their day-to-day income sources shut down, analysts have said.

Those most likely to fall into poverty are the vulnerable Ugandans that have been sitting on the cliff – occasionally falling below and above the poverty line whenever there is a small shock.

According to Dr Fred Muhumuza, an economist states at least 43 percent (18m) of Ugandans are vulnerable and because of the lock-down, it means a huge fraction (15-17 million people) of these will easily fall back into poverty.

This estimate is above the government’s own official estimate that puts the figure of those likely to fall into poverty because of Covid-19 at only 780,000 people as per the Ministry of Finance estimates.

Matia Kasaija, the Finance minister, said “the low activity in industry and services sectors will result in loss of jobs further leading to a decline in economic growth and an increase in the level of poverty. The number of people that could be pushed into poverty is estimated at approximately 780,000.”

Measures to stop the spread of covid-19 have left several sectors closed. These include areas that employed many Ugandans like markets, bodabodas, retail trade among others.

Other areas like transport, hotels and tourism have also shut down. Some 60 percent of Ugandans are employed in the informal sector, which means they earn daily income – measures like suspension of public transport, closure of Kikuubo business centre, closure of bars, and markets hits them hard.

Muhumuza said those already below the poverty line – estimated at 21.4 percent (9 million Ugandans) – will fall further into poverty.

The centre for Budget and Tax Policy, a local think tank, has said about 7 million Ugandans require direct government intervention to ensure they don’t starve.

For Uganda, the overall health of the economy will suffer a blow, Kasaija said. In a statement to Parliament, Kasaija has indicated that Uganda’s economy will grow at just over 5 per ent, a drop from the earlier projected 6 percent with the impact of the coronavirus filters into the economy.

This forecast rhymes with what researchers at the Economic Policy Research Centre (EPRC) have projected.

Paul Lakuma, an EPRC research fellow, said the impact on the economy will depend on how long the virus will take to be controlled. He said if it is just two months, then anything between 0.5 and 1 per cent will be lost.

On what government can do to help those likely to fall into poverty, Muhumuza said government’s hands are tied. He said it can try to reduce on taxes so that those who will get pay cuts can retain much of their income.

Lakuma said the government has little room to intervene to reach all the vulnerable people and business that will likely collapse.  He said, for now, the government should steer clear of that discussion. While the government is not yet certain of what it can do to help those that will be hit hard, one thing is certain: hard times are coming.

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