Business

COVID-19: Uganda’s Private Sector wants Gov’t to Pay All Domestic Arrears; Capitalise UDB

The Ugandan business community has urged government to pay its domestic suppliers as one of the measures of reviving the economy during, and post COVID-19 pandemic.

“Government should pay all domestic arrears (money owed by Government to companies and individuals in Uganda),” said Private Sector Foundation Uganda (PSFU) boss, Elly Karuhanga.

“This will increase liquidity in the economy,” he emphasised.

The Civil Society last week warned against accumulation of domestic arrears.

For instance, Ministry of Local Government (MoLG) has a funding gap of Shs 51.5 Billion needed to settle domestic arrears.

Treasury Secretary Keith Muhakanizi recently directed government accounting officers to make prioritise payments for the salaries, health sector and security.

“Please note that payments outside the above categories are not a priority at the moment and will therefore NOT be handled until later as guided by the lockdown measures by the government,” said Muhakanizi.

Yet, delayed payments of suppliers partly contribute to the high costs paid by Government in obtaining goods and services.

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“Worse still, domestic arrears distort business operations and threatens survival of the private sector which needs to maintain a consistent cash flow to operate effectively,” said CSBAG.

PSFU also called for the deferment of Payroll Tax payments to ease business cash flows for the next 6 months; payment of Outstanding VAT refunds by Uganda Revenue Authority; proposal of Turnover-tax (for those companies who file losses to URA) in the current budget proposal should be postponed to next FY (21/22); tax on rental properties be frozen for six months effective April 2020 and no taxes should be increased on rental properties; and lower taxes on products produced with locally sourced raw materials.

The business community further asked government to restructure Uganda Development Bank (UDB) to manage the new development bank dynamics; capitalize UDB so that it can effectively support the financing requirements of Ugandan entities; support the tourism sector with a line of financing through UDB; improve the Administration and structure of the Agriculture Credit Fund; and enact the NSSF (amendment bill) 2019 to increase the supply of long term financing for a cheap source of resources.

They businessmen also want government to recapitalize and procure more cargo aircraft for Uganda Air Cargo to ensure foreign market expansion; review the merits of merging Uganda Airlines in the Uganda Air Cargo and ground handling.

Other suggested measures are:

Production:

  • Promote producer groups and cooperatives and an efficient Warehouse Receipt System to ensure food security.
  • Ensure value addition for both domestic and export markets.
  • Enhance the Buy Uganda-Build Uganda initiative (BUBU) in order to insure import substitution and make the young population find it attractive to go into manufacturing and value addition.
  • Strengthen capacity of UNBS to ensure standards of products which will also support our export receipts.

Transport and Logistics

  • The national task force and private sector are finalizing the management of truck drivers’ movement
  • Promote and enforce a digitalization transport system for Ugandans to be able to access essential services.
  • The e-system should manage and monitor movements during this crisis like UAE has done. This will support the stickers being given by the Ministry of Transport, as well as distribution of food
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