Free Access | June 2022

THE SOCIO-ECONOMIC IMPACT OF COVID-19 ON BUSINESS ENTERPRISES IN UGANDA: EVIDENCE FROM MICRO, SMALL AND

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Abstract:

This policy briefing note is part of a broader study designed to provide country-specific evidence for Uganda on the immediate, medium-, and long-term impacts of the COVID-19 pandemic, related mitigation measures, and policy responses on Micro, Small, and Medium-sized Enterprises (MSMEs). It represents the first wave of a planned panel study tracking how MSME situations evolve during and after COVID-19. The note analyzes COVID-19 effects on enterprise operations, business recovery, employment in the MSME sector, and enterprise resilience. The effect of COVID-19 on Ugandan MSMEs is enormous across the analyzed episodes. The survey reveals significant permanent business closures due to direct and indirect factors, alongside intermittent complete and partial closures. At the onset of COVID-19, the complete business closure rate (67%) was far higher than the partial closure rate (11%). By the end of the second lockdown, businesses had not regained pre-COVID-19 conditions, and the second lockdown reversed earlier recovery progress. Enterprise performance was weakened throughout, with the most severe impacts felt in the hospitality and education sectors, as well as micro and small enterprises. Overall, 41% of jobs were lost in the studied MSMEs, with results indicating higher vulnerability among female and young workers. The overall business resilience index is low at 60, well below the threshold for robust resilience (>75). Key policy considerations include: addressing the cost of doing business during economic shocks; strengthening structures for better organization and coordination of MSMEs; implementing gender-responsive social protection policy responses to support job and income security for women and youth; and targeting support interventions toward the most affected sectors.