As the corona virus continues with its expeditious march around the globe, countries have taken at heart precautions set by the WHO like social distancing, hand washing, immediate medical response to related symptoms all in the spirit of averting contagion. However, the million dollar economic paradox lies between the proven efficient way to stop the spread (social distancing) and its adverse effect to the supply side of the economy.

The pressing questions are what path of shock and recovery world economies are likely to undergo and whether they will be able to return to their pre shock out levels and growth rates. Will there be any structural legacy from the covid-19 crisis?

Uganda’s Case;

Without any exceptions, the very first presidential speech addressing the nation about the lingering catastrophe that had sandwiched all its neighbors saw the stressing of already existent and ushering of new medical guidelines like closure of all educational institutions, banning of all public gatherings, closure of public bars to mention but a few.

The implemented measures up to date of banning public transport means are irrefutably plausible in line with the core motive of averting further spread of the virus. The virus will surely leave a social and medical trail, with so many losing jobs, businesses hitting a dead end, financial systems crippling not to mention the neglected numerous families that await to starve to death. The government’s effort to contain and neutralize the effects are to some point recommendable but the major worry of how prepared the nation is for the adverse economic backlash can’t be utterly negated.

Motorcycle transport (commonly known as boda-boda) is one of the biggest forms of employment in Uganda and yet one of the many businesses to suffer from the Corona crisis.

Forecasts cant help much here, for example, with Uganda’s nature of economy structurewhich partly influenced Uganda’s ranking as the world’s most entrepreneur nation by the Global Entrepreneurial Monitor(GEM) as of 2014, a position it has relatively maintained since thenreveals how majority of Ugandans depend on petty jobs, small businesses for a day’s survival. The informal sector employs more than 80 percent of the labor force and it contributes over 50 per cent to the national GDP according to Uganda Bureau of Statistics(UBOS). With the prevailing status quo, Uganda is set to hit a lag in levels of employment, capital formation as business activity drastically declines.

The intensity of the corona virus shock will be determined by underlying virus properties, policy responses as well as consumer and corporate behavior in the face of adversity. The shape of the shock will however be determined by the virus capacity to damage the economies supply side, particularly capital formation. The chances of occurrence of a U or V stock shape are equal, the battle is therefore to prevent a clear U trajectory.

With the above knowledge, it becomes imperative to establish the covid-19 mechanism for damage to the supply side not forgetting the appropriate policy response to prevent the damage.

There is a long history of financial crisis crippling on the economy’s supply side, a fact policy makers ought to be well acquitted with, however Corona virus extends liquidity and capital problems to the real economy at an unprecedented scale.

The obvious mechanism for damage on the supply side is fueled by the most efficient way of contagion aversion, social distancing; which has further sabotaged efficient exchange of goods and services in markets. The fear of banking institutions running low on liquidity as a result of panic shopping and dire uncertaintyin the investment field has been made explicit by the deteriorating financial services like closure of several bank branches. The proverbial clique; survival for the fittest is set to define majorities’ survival as the crime rate escalate asfamilies drown in domestic violence. Revenue collection from tourism, entertainment is estimated to have declined by 78% and several infrastructure projects have stagnated due to limited funding from external funders.

The most appropriate policy response to curb the impact on the supply side, though quite hard in most developing countries is adopting a highly efficient feasible digitalization. How possible can it can this be applicable in Uganda?

The introduction of cellular telephony has revolutionized Uganda’s telecommunication industry since the first network went live in 1995, with two more following in 1998 and 2001. As early as 1999, Uganda became the first country on the continent where the number ofmobile subscribers passed the number of fixed-line users, with a ratio projected to be more than 18:1.

The sector is consistently growing consistentlygrowing at around 50% p.a while the market penetration is still less than 9%. The recent introduction of GPRS will enable the mobile operators to play a large role in internet service provision. The United Nation’s SDGs number nine; Industry, Innovation and Infrastructure resonate with Uganda National ICT policy(2004) aim of transforming the country into a knowledge society by 2025 with ICT at the center of all aspects of life.

Basing on Uganda’s on Uganda’s mobile network coverage survey as of March 2018 which indicates a great mile stone in internet coverage with 2G networks covering the entire population, and the mobile broad band networks (3G/4G) covering 4 in 5 people in the country, it prudent to recognize and appreciate the country’s effort in pushing ICT to the center of all life aspects which is reflected in mobile technology as an enabler of digital services like mobile money. The broad access to mobile phones and the low cost structure associated with deploying mobile money services country wide have seen it become the main driver of formal financial inclusion. The population can leverage on the wide connectivity and resort to online services like shopping, banking and even investment in order to beat the impact of the virus on the economy. However, the limiting factors are without second thought spread from the high unit cost of internet usage, limited publicity and general sensitization of the masses about how to use the internet to grow their businesses.

With a steadily growing trend of digitalization with a section of people embracing and positively exploiting it amidst the prevailing challenges, am with a clearly conspicuous certainty that Uganda will surely retain its pre shock economic position and even do far better.


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