Africa-Press – Uganda. The government has embarked on a move to digitise small-and-medium enterprises (SMEs) and village savings and loan associations (VSLAs) across the country to enable them survive the Covid-19 shocks.
Through Microfinance Support Centre (MSC), government has now embarked on piloting Covid-19 response and resilience programme (CRRP) in north, eastern, and central Uganda.
On Saturday, MSC said they are already mobilising farmer groups for orientation upon securing partnership with GOAL Dynamic, a non-governmental organisation, to train and digitise hundreds of business entities.
Mr James Muhwezi, the MSC’s Business development manager, told Daily Monitor that government was determined to save SMEs from slumping.
“The farmers and smaller businesses, whose levels of vulnerability are high with low levels of resilience contribute a lot to the economy since they play a key role in the supply chains, and that means their survival is very key during the pandemic,” Mr Muhwezi said.
He added: “Many farmers [due to lack of market] are making huge losses while many businesses are collapsing because customers are no longer coming to the markets. That is why we want to capacitate these categories to be able to access the market digitally.”
Mr Muhwezi said the digital market will minimise physical contact and will also enable government to effectively finance and build their capacities.
The pandemic has generated a major economic crisis with a substantially reduced production of goods and services globally following a collapse in consumption.
Whereas SMEs have experienced reduction in labour supply, demand has significantly diminished during the pandemic as consumers experienced loss of income.
In Lango Sub-region, about100 farmer groups with more than 2,500 members as well as individual businesses will be digitised. They will also be given tablets and smartphones to access the platform. Impact on SMEsThe market traders’ association chairperson, Mr Patrick Omaya, said of the 1,500 registered businesses at Gulu main market, 113 have reportedly closed down due to their inability to withstand the Covid-19 shocks.
“We are predicting even more to collapse in the coming months because many of these business owners have been compelled to feed or medically treat their families on the little capital they acquired through loans,” Mr Omaya said.
Mr Muhwezi says MSC intends to enable SMEs gain increased access to agro-inputs, and access micro-irrigation technologies by youth farmers under rural self-help groups, especially women-owned groups through digitisation.
He added: “Once they are digitised, they can order for agro-inputs, source information, sell their products online including applying for credit from MSC using an ICT enabler since movement and physical contact is restricted.”
Mr Innocent Omara, an entrepreneur, says the low levels of digitalisation and difficulties in accessing and adopting technologies justifies the move by MSC at the moment.
Uganda has an extensive SME sector which accounts for approximately 90 per cent of the entire private sector, more than 80 per cent of manufactured output and contributes about 75 per cent to the gross domestic product. It also employs more than 2.5 million people in the country.
SMEs are largely concentrated in the major urban areas and are predominantly engaged in hospitality, entertainment, education, wholesale and retail trade, manufacturing, finance and insurance, health, social work, furniture, agriculture, among others.
Early this year, the Institute for Social Transformation (IST) started to pilot the market-garden Application in Central Uganda, a digital platform that has since helped women-led groups and market women to sell their products online.
“We are emphasising to these market women to embrace technology to sustain their businesses since nobody now likes to go to crowded places to buy goods because they fear to contract Covid-19,” Ms Maureen Wagubi, the IST executive director, said.
Report
A report published by the Organisation for Economic Co-operation and Development (OECD) in July indicated that SMEs and entrepreneurs were worried about the impact of Covid-19 on their business survival.
“SMEs find it difficult to obtain information not only on measures to halt the spread of the virus, but also on possible business strategies to lighten the shock, and government initiatives are available to provide support,” the report said.
OECD stated that measures to contain Covid-19 such as lockdowns and quarantines led to a severe drop in utilisation while supply chains were interrupted leading to shortage.
In its 2020 Economic Outlook, OECD projected a 6 per cent drop in global GDP, and a 7.6 per cent fall in case of a second pandemic wave by the end 2020, with a double-digit decline in some of the most hit countries, followed by a modest recovery of 2.8 per cent in [email protected]
