Covid – 19 Market Diagnostics and Options for Long-Term Recovery (Supply – Side Report)

Covid – 19 Market Diagnostics and Options for Long-Term Recovery (Supply – Side Report)

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    The overall objective of the study was to develop practical solutions for preserving and building relevant elements of the financial system to support the survival, recovery, and growth of micro and small enterprises (MSEs) in Uganda. The core of the market analysis was to understand how the supply of finance to the MSE sector in Uganda had been affected by the COVID-19 crisis and what options were available to build on ready measures to mitigate the impact. This analysis identified both threats and opportunities for inclusive finance service providers (IFSPs) to meet the financing needs of MSEs.

    With the support of the Association of Microfinance Institutions of Uganda (AMFIU) and with some direct provision of information by IFSPs, the study team had detailed operational and financial information on 30 SACCOs and 11 MFIs. Due to confidentiality/nondisclosure policies, AMFIU provided anonymous data, stating only the region in which the entity operates and its institutional form.

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    Covid – 19 Market Diagnostics and Options for Long-Term Recovery (Demand- Side Report)

    Covid – 19 Market Diagnostics and Options for Long-Term Recovery (Demand- Side Report)

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      The COVID-19 pandemic has had significant impact on the Ugandan economy especially hitting the micro- and small enterprises (MSEs) in the informal sector. MSEs have been facing unprecedented income losses and uncertainties about their future because of business disruptions due to the outbreak of COVID-19.

      FSD Uganda commissioned a demand side market diagnostic study to assess the impact of COVID-19 on micro and small enterprises in Uganda. The overall objective was to develop practical solutions to preserve and build relevant elements of the financial system to support the survival, recovery and growth of micro and small enterprises in Uganda.

      From the research, only 3% MSEs reported to be completely recovered. 71% of the surveyed MSEs are yet to return to normal pre-COVID-19 operations timing. Several factors such as reduced hours of operation, disruptions in movement, and general low customer turnout have impacted the businesses severely.
      MSE owners hope to bounce back, however, some issues continue to plague the recovery of enterprises. These include, on an average 50% of reduction in household income due to low revenue from the business, job losses in the family, or depletion of other income sources hit by the pandemic.

      Women-led enterprises have suffered a greater average loss in income (50%) compared to men-owned MSEs (33%) from the pre-pandemic level of income. Also, while MSEs in urban areas have been able to attain 57% of the pre-pandemic income level, MSEs in rural areas have recovered up to 50% of the pre-pandemic income level.

      As per the estimates of the World Bank, the COVID-19 crisis has pushed around 2.6 million Ugandans into poverty. With longest closure of schools in Uganda, not only the education sector but many other businesses providing services in the ecosystem suffer a great deal in their bid to recovery to pre-pandemic level.

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      IRA Regulating for Innovation – Case study

      IRA Regulating for Innovation – Case study

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        The enactment of a new Insurance Act, which came into operation in early 2018, expanded the Insurance Regulatory Authority (IRA)’s mandate from market soundness and consumer protection to also include market development. As part of this new mandate, the IRA is committed to encourage and facilitate innovation in its market. However, encouraging innovation may introduce new risks, thereby leading to conflict between the different mandates. To strike the right balance, the IRA recognised that it needed to update some of its existing supervisory processes and regulations, plus introduce new tools to steer its interaction with the market.

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        The Overall Impact of COVID on The Economy; An Agile Scenario Analysis

        The Overall Impact of COVID on The Economy; An Agile Scenario Analysis

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          This agile scenario analysis conducted in partnership with the Ministry of Finance, Planning and Economic Development and The Bank of Uganda explored the potential short and mid-term economic effects the pandemic would have on the key labour segments. Using additional insights from ongoing economic recovery efforts, the team also identified the potential role various sectors could play in strengthening the inclusiveness of the country’s recovery efforts.

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          Assessing the Economic Resilience of Ugandan Households During COVID

          Assessing the Economic Resilience of Ugandan Households During COVID

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            This phone-based survey conducted between April 2020 to September 2020 over five waves provides a detailed analysis on the resilience of the sample surveyed. It demonstrated:

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            Highlights: Impact of COVID-19 on the economic resilience and financial behaviour of Ugandans

            Highlights: Impact of COVID-19 on the economic resilience and financial behaviour of Ugandans

            FSD Uganda partnered with the Ministry of Finance, Planning & Economic Development and undertook a COVID-19 tracker survey which traced the impact of COVID-19 on livelihoods, financial behavior, and social responses of Ugandans. The phone-based survey was conducted in 5 waves between April and September 2020.

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            Unlocking the Potential of Uganda’s Housing Value Chain Through Strategic Partnerships and Collaboration

            Unlocking the Potential of Uganda’s Housing Value Chain Through Strategic Partnerships and Collaboration

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              By Jimmy Ebong and Maria Nkhonjera
              Uganda’s Financial Sector Development Strategy (FSDS) estimates the country’s housing deficit to be 1.6 million units, with an annual requirement between 180,000 and 210,000 units. Given rapid rates of population growth and urbanisation, a widening housing need may overwhelm cities in the near future. Uganda has the third highest population growth rate in Africa (at 3.6%), while the country’s urbanisation rate is projected to be 5.6% per annum. Urban households are expected to grow to 3.8 million in 2025, from 2.9 million in 2020 – a 31% increase. Uganda’s urban areas are therefore poised for a rapid increase in households, implying a huge demand for adequate, affordable housing. Only 44% of the urban population own their dwellings[1], while the 2018 FinScope Survey indicates 19% of adults aspire to acquire a house.

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              Regulating for Innovation Supervisory Toolkit

              Regulating for Innovation Supervisory Toolkit

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                The fast-paced changes in the financial sector are primarily driven by innovation and advancements in technology. Proactive engagement with the market will help policy makers and regulators build their understand of trends and allow them to effectively assess the opportunities new technologies present against any emergent risks.

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                Cooperatives as Engines of Transformation

                Cooperatives as Engines of Transformation

                By Anthea Paelo

                Cooperatives continue to be an important engine for economic productivity and growth in countries like Uganda. They play a critical role in mobilizing savings, increasing access to credit, and facilitate various activities along production value chains, including procurement, storage and distribution. Where, for example, a farmer might find it challenging to access a tractor to plough his fields, or credit to purchase seeds, as a part of a cooperative he can access these inputs more readily and at much better terms. It is perhaps for this reason that as of January 2020, agricultural cooperatives numbered over 9,000, double the number just twelve years ago1.

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                Determinants of Interest Rate Spreads in the Ugandan Banking System

                Determinants of Interest Rate Spreads in the Ugandan Banking System

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                  FSD Uganda Executive Director made a presentation as a discussant at the Bank of Uganda (BoU) and International Growth Centre (IGC) Policy Seminar on lending rates. Download the presentation to find out about why we should care about bank interest rate spreads and how it affects every day Ugandans and Ugandan businesses.

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                  Insurance Innovation Dialogue; Opportunities in the time of COVID-19

                  Insurance Innovation Dialogue; Opportunities in the time of COVID-19

                  By The FSD Uganda Team

                  The Insurance Regulatory Authority (IRA) of Uganda, in partnership with FSD Uganda and the Innovation Village, hosted an interactive virtual workshop on 19th November 2020, to discuss the opportunities and challenges to innovation in the Ugandan insurance market.

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                  Market Research on Unsecured Lending for MSMEs

                  Market Research on Unsecured Lending for MSMEs

                  Micro, small, and medium enterprises (MSMEs) (including smallholder farmers) struggle to access formal credit due to a lack of collateral and poor record keeping preventing them from making productive investments.

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                  Informal Sector Pensions: Protecting millions of East Africans from old-age poverty

                  Informal Sector Pensions: Protecting millions of East Africans from old-age poverty

                  By Joseph Lutwama.

                  It is everyone’s desire to retire with a roof over their head and a decent income that will sustain them through their old age. However, very few ever realize that ideal, and it remains a dream that eludes millions in the region. Many East Africans never retire but die while toiling away as their productivity decreases. Economists and financial experts tell us that it is possible for one to save for retirement, and if those savings are invested well, they stand a better chance of reducing their old-age vulnerability and living their retirement dream. However, this is not the case in East Africa. Kenya, which has the highest pension sector coverage, sees only two out of every 10 working adults save for retirement. What could explain this paradox? In East Africa, the pension system is predominantly focused on the formal sector, leaving the informal sector largely unattended to. With levels of informal employment in East Africa as high as 91 percent, it follows that there would be such low levels of formal retirement savings.

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                  Strengthening the effectiveness of Uganda’s consumer protection framework

                  Strengthening the effectiveness of Uganda’s consumer protection framework

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                    An assessment of credit cost disclosures
                    There is a need to promote trust in the financial sector by putting robust consumer protection measures in place – this will help protect lower-income borrowers from poor market conduct and bridge the credit gap in the market.

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                    Message from FSD Uganda Executive Director on COVID-19

                    Message from FSD Uganda Executive Director on COVID-19

                    Uganda confirmed its first case of COVID-19 this weekend. The Government of Uganda, together with private sector actors, continue to demonstrate great leadership by putting in place and adopting progressive measures aimed at protecting Ugandans and limiting the impact of the pandemic.

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                    Guest blog – Harnessing the power of data to create relevant products and services for consumers

                    Guest blog – Harnessing the power of data to create relevant products and services for consumers

                    The 2019 Financial Inclusion Week themed Financial Inclusion: For What? Is being recognized globally between October 21 and October 25. The Financial Inclusion Week (FIW) is aimed at getting stakeholders to revisit their fundamental purpose and renew efforts to achieve financial inclusion. FSD Uganda will share a series of reflections from our technical experts and stakeholders. Today, we hear from the Uganda Communication Commission about opportunities that exist to protect and empower consumers through information…

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