Uganda's economy fails to shake off Covid-19 after effects

Shamim Nabakooza

For months, Uganda’s economy has failed to shake off the effects of the Covid-19 pandemic and it is now projected to grow at a dismal 3.5% which is far short of the 6% growth rate predicted last year.

This was more or less acknowledged by the minister of Finance Matia Kasaija who admitted that Uganda’s economy is in limp mode with government struggling to pay for its priorities like releases of the first quarter of the budget.

Kasaija revealed that he is hesitant to borrow even from the Bank of Uganda to foot bills for government priorities for fear of increasing the burden of interests paid on loans.

Government released less than Shs 14 trillion projected to have been released in the first quarter of the budget execution.

Interfacing with the committee on the National Economy in parliament, MPs tasked the minister to explain why the meagre releases effect was hardly traceable on ground. This as some legislators argued that several districts had not received salaries of their staff in the expected budgets.

Kasaija blamed revenue shortfalls that were not anticipated as the cause for the crisis in the economy that saw government effect budget cuts from several MDAs with money spent on salaries, leaving government projects stuck.

Currently Uganda is experiencing a prolonged drought that has seen hundreds of people reported dead especially in areas of Karamoja subregion.

Districts of Napak, Abim, Nabilatuk among others are struggling to sustain the elderly and children with malnutrition now more evident.

Legislators from the Karamoja subregion are slated to meet the prime minister for a lasting solution on the hunger challenge after reports indicated that the relief government delivered was inadequate leaving many without food.

Even with all the financial challenges, Disaster minister Hillary Onek informed government that at least Shs 200 billion is needed for food relief for Karamoja.

Meanwhile disasters are projected to affect more parts of Mbale subregion and Teso subregion in the districts of Soroti, Bukedea among others as intimated by the Metrology officers.

How else is the economy affected?

While Uganda has five active power dams, citizens continue to experience persistent load shedding. Load shedding is when an area does not have electricity. This affects businesses and households adversely.

The situation seems destined to get worse with the news of a major breakdown at Isimba power dam.

Uganda will soon resort to importing energy from Kenya which has been its market for electricity. The purchase of power from Kenya is said to take three weeks.

The association of traders under KACITA has reported increased closure of businesses over loans.

Thaddeus Musoke the chairman KACITA intimated that their members have not only closed businesses but they are also auctioning their properties to service loans that accumulated interests.

Musoke revealed that the purchasing power for most of the goods has declined calling for the government to activate the special fund for KACITA promised by the president.

Musoke intimated that some of their traders are in hiding over loans while some have had their health ruined due to the pressure as a result of the economic stress.

As economic challenges persist, Uganda has continued to offer tax exemptions and incentives to investors in which the government loses more than 5 trillion every financial year.