Kenneth Kitungulu, Stanbic Bank Uganda Head of Global Markets (PHOTO/File) KAMPALA — There was a massive deterioration in business conditions in Uganda following the lockdown that started on March 24, 2020, a new Stanbic Purchase Managers Index (PMI) survey report for April has indicated.
Deteriorating business conditions have now been signalled for two consecutive months as headline PMI registered 21.6 in April, down from 45.3 in March and the lowest reading since the survey began in June 2016.
Company closures, a lack of new orders and restrictions on travel were highlighted as having the biggest impact on businesses.
Stanbic Bank Uganda, Head of Global Markets, Kenneth Kitungulu commenting on the PMI said company shutdowns amid the COVID-19 lockdown led to a further drop in output during April, with most respondents signalling a fall.
He said all five broad sectors covered by the survey recorded massive decreases in business activity.
“Negative business sentiment is not necessarily a surprise given the restricted movement during the past 45 days of the lockdown, which has led to a decrease in aggregate demand and in turn a decrease in output. However, we should expect a return to normalcy once the pandemic subsides. In fact, we have seen a number of our clients adapt their business models to deliver goods and services to the clients directly – through adopting digital solutions as well as increase the shelf life of some perishable goods whose demand has been impacted by border closures,” he said.
He added: “Import substitution will go a long way in stimulating local companies to produce goods that were imported. Government should also support the Buy Uganda Build Uganda policy as a way of stimulating economic activity in the economy. Furthermore, the Annual inflation report released by the Uganda Bureau of statistics for end of April indicates that whereas the cost of cereals and processed foods such as maize floor and Rice have gone up, there has been a marked drop in prices of perishable food such as fruits, vegetables and bananas partly due to difficulties in exporting. This further reinforcing the need for local value addition not only to increase shelf life but also to increase our export earnings.”
According to the survey report, falling demand by respondents, and new orders decreased accordingly. With output requirements down, companies looked to scale back employment and purchasing activity, in each case for the second month running.
Restrictions on travel meant that those […]