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PRESS RELEASE: Current Situation of Affairs Arising from Covid 19

Dear fellow business community players in Uganda and the public at large, It’s a very alarming situation following the outbreak of the dangerous COVID19 caused by Corona Virus which is a global pandemic.

This has not only affected the incomes and cash flow of the public but affecting us both socially, psychologically, spiritually and all the ways of life including our health.

Various sector in the economy have been affected and this has led to the breakdown of the entire business chain from manufacturing, distribution, whole selling, retailing to final consumers. Other sectors like health, tourism and hospitality and many others have also greatly been affected.

This situation has not spared both imports and exports capacities as well. We pray this situation normalizes soon.

We would like to thank our fearless fighters, his excellency the president, hon. Minister of health, the permanent secretary of ministry of health and the entire health ministry stakeholders, all the joint security forces, all government ministries and agencies, all the media houses, all the telecom companies, all the non-profit organizations, all religious leaders, all the business community players especially those who have ensured constant supply and distribution of food items in various locations of the country, and all the responsible citizens at large who have taken a lead in safeguarding, sensitizing, and protecting the entire country against the deadly COVID19.

Business community players in all sectors have been most hit in terms of reduced cash inflows, scarcity of products and services to offer and be offered, inconveniences in mobility and ease to transact businesses, many have faced mandatory closures like schools and institutions and all non-food markets, stores and shops as the quickest intervention to reduce on the spread of the dangerous disease and many others. This has brought several challenges including; inability to finance and meet the loan repayment obligations, inability to fulfill rental fees obligations, inability to meet daily and normal household (Essential) requirement to individual families among others.

KACITA Uganda, as a reputable organization that advocates for fair and sustainable business operations in the country, we take note of the interventions employed and we are in full support of them. We have taken further steps and engaged almost all the relevant stakeholders including all ministries and government agencies and fellow private sector players where we have recommended several more interventions that would enable the business community cope up and recapitalize easily after this economic recess. Some of the key interventions have been;

• We officially wrote and recommended to all landlords to at least be flexible and have a heart of understanding once the lockdown is done and the situation normalizes given the fact that all the tenants have been loyal and able to meet their rental obligations. We further recommended that they adjust in the rental payment deadlines without penalties and also accept rental instalments for those tenants that may fail to raise full payments since all business have really faced a heavy setback.
• We also recommended for setting up a specific fund at least in Uganda Development Bank (UDB) whose focus should be on financing and help all sinking businesses recapitalize. These businesses should range from both manufacturing, assembling, distribution and while selling which in turn help suffice the final consumers’ demands. This is because there many businesses that may not be able to continue operations due to this economic recess experienced and therefore need to recapitalized. More so, the central bank should ensure that all commercial and financial institutions develop specific products aimed at enabling several businesses recapitalize. Such products should be tied to special lower interests rates with prolonged repayment periods to enable and attract people to borrow and boost their sinking business which in turn will boost the economy recovery.
• We recommended setting up of more pro-people crisis management systems at various levels including all business liaison points and premises in conjunction with all communication channels of the ministry and its stakeholders institutions in the country. This was meant to ease collaboration with relevant authorities in case of identification of some COVID19 cases, monitoring and reporting scammers and those aiming at exploiting the public economically, collecting relevant information on the situation cracking adamant people and help in implementing the proposed interventions successfully and receiving feedback from the business community which will then form the basis for updating the entire public.
• We also recommended the Ministry’s directive and arrangement through the central bank (Bank of Uganda) for all financial institutions to unconditionally restructure all running loan portfolios. The Ministry should allow loan restructuring more than once including those that might have been restructured before given the unpredictable economic situation at hand.
• We further recommended a 3months waiver on all loan instalment repayments while suspending accumulation of arrears. The repayment of these loans should therefore be reinstated from afresh period after the situation normalizes.
• We recommended the Ministry to give directive for a blanket waiver of 3 months’ rent for all landlords to all tenants and this should not call for accumulation of arrears. This is practically possible especially when there are both loan waivers and restructuring directives a concern that most landlords have before considering adjusting or listening to the cries of the tenants.
• We also recommended a 3 months’ waiver on Value Added Tax (VAT), With holding Tax (WHT) Pay As You Earn (PAYE) and National Social Security Fund’s contribution on all employees and business operators since this situation has affected everyone’s earnings and most of these contributing populations will not be earning normally in such situation. Most players in the business community borrow money not only to finance and service but to first pay both VAT and withholding Tax before even the supplied merchandise is paid for. This becomes so hard especially those who supply on credit.
• We also recommended that various task forces that were formed at various level and with various operational lines be respected and made effective. This is because there are many task forces that have not yet been functional and this greatly leads to failure of the intended objectives to the public.
• We would like to thank the Government’s initiative for the timely and urgent interventions especially on food distribution to urban vulnerable groups whose operations and consumption have been basically hand to mouth without enough to save and prepare for such a pandemic. Great thanks to the various business people and companies that have offered to give back to the community and support the Government’s call at such critical time through giving food items, transport facilities and other essentials to various needy groups. This will greatly help the beneficiaries go through this trying moment with great health and able to cope up with life after. We however recommend that different groups including Non-Governmental organizations, religious leaders and cultural leaders be brought on board to supplement on the Local council leaders and the security organs. We believe that this would help in ensuring transparency in the distribution process and helping in beating the distribution set target periods in all identified areas.

Basing on our findings, it has come to our attention that landlord have faced a lot of pressure from various financial institutions to meet their loan repayment obligations to avoid the likely penalties and ceasing of the presented collateral even when their properties are not making any income since all the arcades, shopping malls, stores and shops are closed. They have been left with no option but rather to transfer the same pressure to their tenants and it is evident that rental notices for April have been issued and discharged to several tenants even when they are not working and feeling the pain of the business losses they experiencing. We therefore request that government comes with a pronouncement and guidance on this matter since landlord are demanding for an official waiver of their loan obligations for at least 3 months so as to also consider waiving rental obligations to their suffering tenants for the same period of time.

We ask our members to contain the situation as we continue to find a solution to this and we continue to seek government intervention in all these matters that are pressing us in the business community.

This has even come at a time when there is a presidential directive to all financial institutions not to attach and takeover any collateral or mortgage that was attached to any credit facility due to failure to meet any loan obligations especially during this period but there is no clear directive to these commercial banks on the existing loan portfolios which would then guide the landlords and other stakeholders especially creditors on how to handle such situations.

Finally, we ask all the players in the business community and the public at large to adhere to all the guidelines set by the Ministry of Health (MOH)and World Health Origination (WHO) by constantly washing hands with soap and sanitizers, keeping social distance and avoid touching most of the soft parts of your body. And for all emergencies in our communities, please don’t hesitate to call 919 or toll free numbers 0800203033, 0800100066 or dial *260# for all possible assistance.

Stay safe, stay home, wash your hands frequently with soap or sanitize and keep social distance.

Thank you,

Secretary General

Management.