More Small and Medium Enterprises in Uganda are feeling frustrated due to a decline in business activities in January 2020
According to a survey named “SME Optimism Index” by Federation of Small and Medium sized Enterprises (FSME) in Uganda, business optimism index fell by 3.5% to 101% in January 2020 from the 104.5% registered in January 2019.
The SME Optimism index is the indication of the health of the SME sector in Uganda.
The index is released in the first month every quarter. The survey considers 6 index components like sales and profits, employment, selling prices and inflation, borrowing costs/ interest rates, order book position and the expected overall economic growth
The survey findings released Wednesday at the FSME offices in Ntinda, shows that up to 83% of surveyed SMEs expected sales and profits to decrease in the first quarter of 2020; 72% expect a moderate increase in the selling products, 66% expect borrowing costs to increase, 82% do not expect to get any new employees, 61.1% expect their order book position to reduce and there is a general expectation of subdued overall economic growth in the same period
The Executive Director FSME, John Walugembe says the negative business views can be attributed to a decrease in money circulation normally experienced in January up to March as most spend overspend in December and also reserve most of their money for school fees which leaves other businesses like entertainment, hospitality and general trading with less activities.
He urged government to put in place policies or projects that will ensure that there is enough monetary circulation among the people
“The government is responsible for ensuring that the economy is progressing and conducive for the business people, if the public has no money to spend, the government must find a way to increase money circulation in the general public,” he said
He further added that things like over domestic borrowing by government which increases the cost of loans, and the trade tension between States like Rwanda and now Kenya are also worsening the situation hence the need for government to put solutions to these challenges