Economists are warning that Ugandans risk losing about 3 million jobs in 2021 if the coronavirus pandemic is not contained.
The warning follows the surging coronavirus infections and deaths that are putting pressure on Uganda’s constrained health sector. The surge is mainly being blamed on reluctance in observing standard operating procedures (SOPs) set by the Ministry of Health.
Hundreds of jobs, particularly in the service sector like travel, tourism, and events, have been lost due to the lockdown brought about by the need to control the spread of covid-19 in the country.
The virus has not been contained yet and there is not much hope to contain it next year. Economists have warned that the job loss multiplier effect is going to be worse in 2021 as supply chains come to a halt, if the situation remains the same.
Economic analyst Ramathan Goobi says the country will experience more GDP cuts.
“The GDP of Uganda will be cut by 10 percentage points. And what this means is we are likely to lose up to 3 m jobs on both formal and informal sides. We have already lost nearly 2.7m livelihoods, including formal jobs which are about nearly 270,000 jobs in 2020.”
Now that the 2021 polls are drawing closer, most investors are also holding back onto their investment plans. The fear is that this might be worse, given the mixture of politics and coronavirus, economists warn.
“That’s why you see an in every election year, 2016, 2011, 2006, we have seen a dip in the GDP even when we did not have coronavirus,” says Patrick Katabai, the Executive Director of the Centre for Budget and Tax Policy before adding that;
“The reason here is that during an election cycle, it is often the case that people abandon some micro-productive activities to join the campaign funfair and the result is you have fewer activities taking place. The economic players are not so active in things that are rebooting the economy.”
Ramathan Goobi, also warns that if the post-election violence and uncertainty is prolonged, then it might make the impact worse.
“If the post-election violence and uncertainty get prolonged this time round, then you are going to see more portfolio investment flying out of the country, not coming in or moving out. FDI’s have already been cut by 3 million dollars.”
According to a report by the Ministry of Finance in the month of June, the trade surplus between Uganda and East African Community slowed down in the FY 2018/2019 compared to FY 2017/2018 mainly on account of the existence of non-tariff barriers in some of the partner states – most especially in Tanzania. This has however made worse by the lockdown and freezes in transport. Economists warn that Uganda’s international trade in 2021 needs a big boost.
“Even those that might have good that will be ready for export might be constrained and therefore our export promotion strategy will suffer immensely,” says Patrick Katabai.
The service industry that normally booms during electoral periods has been brought to its knees due to the coronavirus pandemic. Recently the government announced a stimulus package through the Uganda Development Bank to support struggling businesses to keep them afloat.
