When Uganda went into strict lock-down in March 2020, it was widely expected that the impact of the pandemic, and associated preventive measures, would be short-lived. A year later, people, businesses and the economy are still adapting to a new reality, with the journey towards recovery only beginning. It is critical to examine baseline data (on the economic lives of Ugandans before the COVID-19 pandemic) alongside insights from studies that continue to explore how the pandemic is affecting Ugandans – especially the most vulnerable segments of society – and leverage this evidence to ensure this journey towards recovery is truly inclusive.
Evidence-based decision making, and responsive program interventions are core to FSD Uganda. We undertook a series of studies that continue to provide policy makers, regulators, and financial market actors with data that is informing the country’s recovery efforts. Insights from the studies will also enable financial institutions including banks, MDIs, MFIs, credit institutions, the government and development actors to create forward-looking strategies that support the recovery of small businesses, women, and youth.
- Lower take home incomes: Jobs returned by September 2020 with over 1 in 3 respondents claiming to work 40 hours a week, but an overwhelming majority of respondents (73%) stated that incomes earned were much less than the same time-period in 2019. Majority of respondents in the Trade, Transport, Light Manufacturing and Services sectors report less-incomes, while Farmers in the survey stated that it became harder to sell farm produce between April to September 2020.
- Compromised household resilience: Two out of three respondents would not be able to come up with UGX 115,000 ($30) in seven days for emergencies – a worrying note on how COVID-19 has compromised household resilience.
- Risk of Over-Indebtedness: An overwhelming majority borrowed from friends and family in the early months of the pandemic straining social networks. Borrowing over digital apps also increased with 15% of respondents having received credit from one. There seems to be a risk of over-indebtedness with 21% of the borrowers of digital apps stating a missed payment in the past 14-days.
The findings above, along with our analysis of the impact of COVID on agriculture, and the agile scenario analysis on the impact of the pandemic on the farming, trading, and light manufacturing community (via personas) that we conducted have strongly contributed to FSD Uganda’s new strategy (2021-2026). Our agile scenario analysis conducted with the Bank of Uganda and the Ministry of Finance in May 2020 estimated that about 1.8 million small traders (mostly women) would not return to pre-pandemic levels of economic activity before 2023. Given the data that is emerging — finance for agriculture, particularly rural finance, finance for trade and the digital economy are some of our key portfolios of work going forward. The others include finance for better quality of life and finance for a more climate friendly approach.
We thank our partners, including the Foreign, Commonwealth & Development Office (FCDO), the Bill & Melinda Gates Foundation, FSD Network Members, the Ministry of Finance, Planning & Economic Development (MoFPED), the Bank of Uganda, among others, who played a big role in pushing a more data-driven approach to economic recovery.