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AGRICULTURAL MSME FINANCING IN UGANDA: A RESPONSE TO COVID-19
IMPACT OF COVID-19 MSMEs have borne the brunt of business risks associated with COVID-19 compared with large-scale businesses. Though exempted from business closure and movement restriction orders, agriculture enterprises have been impacted both in terms of access to inputs due to transportation restrictions and by bans on weekly markets. They also suffered a loss of demand due to the shift away from the consumption of fresh agricultural produce to dry rations, with 71 percent of agricultural businesses reporting a significant decline in demand.65 The disruptions to trade and supply chains caused by the pandemic have also made it more difficult for farmers, particularly women, to secure and sustain their livelihoods. Farmers reported loss of income from disruptions of both agricultural and non-agricultural activity, as well as increased food and input prices, while receiving less for their products. A survey conducted by Heifer Uganda found that over 87 percent of respondents reported that their income had been reduced by half since March 2020.66 Further, our interviews with Ugandan banks indicate that women-led MSMEs were disproportionately affected by Uganda's containment measures, as revealed by 70 percent of the institutions surveyed.
Women, particularly single mothers, were reported to be the most severely impacted by the COVID-19 pandemic. This might be because single parents typically lack access to finance and are burdened with extra unpaid care and domestic labor responsibilities, leaving them unable to sustain their businesses, particularly during difficult times. To alleviate the impact of the COVID-19 pandemic on agriculture MSMEs, the Government and the Bank of Uganda have implemented several regulatory measures, with the support of development finance institutions and commercial banks. A combination of fiscal, structural, and monetary policies has been put in place, with an emphasis on agriculture MSMEs. These policies are detailed below.
INTERVENTIONS TO EASE THE IMPACT OF COVID-19 ON MSMEs IN UGANDA The following policy measures have been implemented by the Ugandan government to ease the financial burden of MSMEs. > Grant exceptional permission to Supervised Financial Institutions (SFIs) to restructure loans of corporate and individual customers that have been affected by the pandemic, on a case-by-case basis effective April 2020. MSMEs benefit from increased liquidity because of this.
65 https://trade4devnews.enhancedif.org/en/op-ed/can-digital-platformshelp-mitigate-agricultural-losses-covid-uganda 66 Heifer International. Bethany Ivie. 2020. Available at: https://www. heifer.org/blog/heifer-international-uganda-covid-report.html
A nationwide transport ban was imposed in Uganda during the coronavirus crisis, in an effort to stop the spread of the pandemic, though bicycles and motorcycles were still allowed to transport cargo up until 5pm. Gulu, Northern Region, Uganda. (Photo by ZUMA Press, Inc./Alamy Stock Photo).
