Efficacy of COVID-19 Macroeconomic Policy Responses in Uganda

The document analyzes how COVID-19 and its containment measures slowed Uganda's GDP growth to 2.9% in FY2019/20, particularly impacting the services and industrial sectors. It details the government's expansionary responses, including reducing the central bank rate to 7%, providing tax relief to businesses, and implementing social safety nets like the Emyooga fund. While these measures stabilized the financial sector and protected some formal businesses, they contributed to a rise in public debt from $12.55 billion to $15.27 billion and increased external debt vulnerability. The paper concludes that approximately 3 million people fell into poverty due to the pandemic.

• COVID-19 and associated containment measures caused Uganda's real GDP growth to drop to 2.9% in FY2019/20, down from 6.8% in FY2018/19. The services sector contracted from 5.7% to 2.9%, with education, accommodation, and entertainment sub-sectors most affected, while the industrial sector slowed to 2.2% growth.
• The pandemic is estimated to have pushed 3 million people into poverty. In the informal sector, at least 20% of firms were likely to close and 11% of earnings were expected to fall below the national poverty line.
• The Bank of Uganda implemented an aggressive expansionary monetary policy, reducing the central bank rate (CBR) from 9% in March 2020 to 7% by June 2020, the lowest level since its 2011 inception. This helped lower commercial lending rates to 17.7% in April 2020, though they later peaked at 20.9% in July 2020.
• The financial sector remained stable and resilient despite reduced profitability. Capital adequacy, liquidity, and credit risk indicators remained above regulatory requirements due to Bank of Uganda interventions, including credit relief that allowed the restructuring of 500,000 loans in Q4 of FY2020.
• Fiscal policy responses included tax relief measures for corporations and MSMEs, such as deferred corporate tax and PAYE, which provided a liquidity shield of UGX 125 billion in Q4 FY2019/20 and Q1 FY2020/21. The government also spent 0.2% of GDP on health systems, security, and livelihood support.
• Public debt increased significantly, rising from $12.55 billion in FY2018/19 to $15.27 billion in FY2019/20, with public sector debt increasing from 35.3% to 41% of GDP. This has led to increased external debt vulnerability and the crowding out of the private sector in the domestic credit market.
• The external sector suffered from a sharp decline in tourism receipts, which fell from 3.5% of GDP in FY2018/19 to 2.4% in FY2019/20, with earnings in Q4 of 2019/20 reaching zero. Foreign direct investment (FDI) and personal transfers also contracted due to the global economic slowdown.
• The government launched the Emyooga poverty eradication scheme worth UGX 165 billion targeting the informal sector through SACCOs. However, the paper notes risks of corruption and limitations due to the fund being restricted to youths aged 18 to 35.

APA

Okumu, I. M., Kavuma, S. N., & Bogere, G. (n.d.). Efficacy of COVID-19 Macroeconomic Policy Responses in Uganda. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2021/09/CoMPRA-06-okumu-kavuma-bogere.pdf

Chicago

Okumu, Ibrahim Mike, Susan Namirembe Kavuma, and George Bogere. Efficacy of COVID-19 Macroeconomic Policy Responses in Uganda. South African Institute of International Affairs, n.d. https://saiia.org.za/wp-content/uploads/2021/09/CoMPRA-06-okumu-kavuma-bogere.pdf.

Wikipedia

{{cite report |last1=Okumu |first1=Ibrahim Mike |last2=Kavuma |first2=Susan Namirembe |last3=Bogere |first3=George |title=Efficacy of COVID-19 Macroeconomic Policy Responses in Uganda |publisher=South African Institute of International Affairs |url=https://saiia.org.za/wp-content/uploads/2021/09/CoMPRA-06-okumu-kavuma-bogere.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{okumundefficacy, author = {Okumu, Ibrahim Mike and Kavuma, Susan Namirembe and Bogere, George}, title = {{Efficacy of COVID-19 Macroeconomic Policy Responses in Uganda}}, institution = {South African Institute of International Affairs}, url = {https://saiia.org.za/wp-content/uploads/2021/09/CoMPRA-06-okumu-kavuma-bogere.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }