President Museveni has said that a comprehensive plan is in the pipeline for government to revive the economy worst hit by the deadly Coronavirus pandemic and its effects.
Highlighting interventions like tax waivers, cheaper loans, rescheduling of loan and tax payments, Museveni said the plan will see the economy gradually return to normal.
“We shall allow corporations including small and medium sized enterprises (SMEs) to delay payment of corporation tax or presumptive tax for taxes due between April and June 2020 and for tourism, manufacturing, horticulture and floriculture to defer until September 2020,”Museveni said as he gave his State of the Nation Address on Thursday.
“We shall also defer payment of Pay-As-You Earn (PAYE) tax by those sectors which are most affected until September 2020, waiver of interest on tax arrears, support to water and electricity utilities in order to ensure continued supply of these essential services to consumers during the period April to June 2020, expedite payment of outstanding VAT refunds, payment of domestic arrears for goods and services supplied to government by the private sector.”
Following the drastic measures announced by government including closure of all educational institutions nationwide, a ban on public gatherings including congregational prayers, sports, seminars, parties, funerals and bars meant to curtail the spread of the virus, the economy has been left on its knees.
Many businesses are almost shutting down, prompting experts to ask government to help businessmen address the issue of loans .
However, speaking on Thursday, the president said government will come to the help of those affected by the measures put in place to contain the spread of the virus.
“For those unable to pay their loans, government through the Bank of Uganda has already put in the gazette the measures to support businesses; including allowing extension of repayment periods, postponement of loan repayment for a limited period, relaxing the conditions for non-performing loans, reduction of reserve funds commercial banks are required to keep with Bank of Uganda and creating a 30 special liquidity facility to rescue businesses that are not able to meet operational costs due to low demand or reduced production due to COVID-19,”he said.
In April, Bank of Uganda directed commercial banks and other financial institutions to extend loan repayment holidays up to one year for borrowers affected by the current Coronavirus pandemic.
“The allowable credit relief measures and terms thereof include repayment holidays for a maximum of 12 months, loan tenor extensions, and any other forms of debt restructuring covered in existing regulations,” a statement by the central bank said.
Museveni said these will continue for all borrowers to help them recover from the effects of the Coronavirus pandemic.
President Museveni said that the Coronavirus pandemic has presented a rare opportunity for the country to start manufacturing some of the items it has been importing from abroad.
“Coronavirus has blocked the channel of dependence on colonial foreigners. Uganda has been importing animal feeds worth shs.28billion per year yet, these are from cassava, maize, etc ─ crops that we have in plenty here ─ cassava, 4.1million tonnes per annum; and maize, 5million tonnes per annum. We can start making them here.”
“Uganda uses $383 million to import medicines and vaccines for human beings and animals per year. We shall manufacture them here. We are growing to produce more and better livestock activities to achieve more for local regional and international markets. Like floor from banana can make better bread compared to wheat.”
The President told the country that many other products like paper, glass products, automobiles will be produced here to avoid dependence on importation.
The president explained that a move to capitalize the Uganda Development Corporation to tune of shs100 billion is in the line to enable government invest in strategic areas.
“The government has put shs1,040.5 billion in the Uganda Development Bank (UDB) to give low interest loans to anybody that wants to go into manufacturing and, may be, commercial agriculture,” he said.
He noted that the money should be borrowed by investors to start industries but also invest more in those that are already in place but are struggling due to the pandemic.
He also mentioned boosting funding to the Uganda Industrial Research Institute (UIRI) in the next 2020/21 to continue with innovation research and incubation of business startups.”
“We shall securing funding for the development of Kampala Industrial Business Park at Namanve and for power transmission and substations for Mbale, Kapeeka, Bweyogerere, Kasese, Soroti, Luzira, Jinja and Mbarara industrial parks; and (xi) Provision of additional UGX 300 billion immediately to boost agricultural production and productivity for seedlings, fertilizers, irrigation, storage facilities and value addition. The target crops are coffee, cotton, tea, palm oil and other oil seeds, cassava, maize, cocoa and dairy, beef, and fish production.”
A number of people have lost jobs due to the Coronavirus pandemic and measures put in place to curtail it.
The president however said efforts to ensure these people get some stimulus package that will assist them recover.
He mentioned groups of people like boda-boda riders, salon operators, bars , nightclubs and musicians among the people who will greatly benefit from the stimulus package after losing jobs.
The president said more money will be put into the youth fund, women fund and NAADS to specifically benefit these groups of people through borrowing at a small interest rate.
“Some of those funds will be modified to deal with the categories of our people that have been affected by the lockdown. These funds can be used at low interest, for these categories of our people to, possibly, do other activities,” he said.
“Government will not allow the landlords evicting tenants on account of not paying rent. Discussions have started with both groups and a solution will be found.”
A number of people in town centres live a hand to mouth life and have therefore been greatly affected by the lockdown because it rendered them jobless.
The president however said government will continue supporting them through food donation as they get something to earn them a living.
“The people affected should be registered and an appropriate formula of support will be found that does not create dependency. Food distribution for the genuine groups will continue until the problem is over. Nevertheless, many families in Uganda do not need free food; they just need seeds and low interest money for borrowing and markets for their products. These measures will deal with the deepening and expansion of the real economy,” he said.
The president however never mentioned a thing about the plan to assist the leisure industry especially tourism recover from the effects of the pandemic saying it can sustain itself.
“This does not mean that we do not value or appreciate the vulnerable economy- the economy of leisure and pleasure. Of course, we value it if it is available. We only note its vulnerability. With real economy consolidated, the vulnerable economy will come back stronger when the pandemic is over.”
“By correctly managing the pandemic, the reputation of Uganda will grow in the world. After the pandemic, people will flock here. The diaspora are now sure of a secure and respectable base, their homeland. Hence, to harvest from the economy of leisure and pleasure, we need to consolidate and expand the real economy. Happily, the leisure and pleasure economy was already integrated with portions of our real economy. The hotels in Kampala, were buying a lot of food from our agricultural sector. The drying up of the local hotel capacity has created a marketing problem for the food industry.”