The impact of COVID-19 on agricultural markets in Uganda

The COVID-19 pandemic and associated control measures have had far-reaching effects on societies worldwide, on the global economy and on employment.  Agri-businesses have not been spared – including those in Uganda. To better understand these impacts, CASA undertook a Rapid Market Assessment (RMA) that included surveying SMEs, their smallholder suppliers, financial institutions and policy research/advisory bodies in Uganda. The aim of the RMA was to assess the impacts of the COVID-19 pandemic and associated control measures on agri-SMEs.

The information from the RMAs will help CASA develop response strategies and activities to support targeted agri-SMEs and their supplier smallholder, that have been impacted by the pandemic, with crisis support so they can identify the right solutions and get back on their feet.

Several measures implemented as response to the COVID-19 pandemic in Uganda have affected small businesses in multiple ways including:

• Quarantine and social distancing – has reduced demand and disrupted supply chains forcing many businesses to close;
• Business closures have resulted in loss of jobs leading to a mass exodus of labourers from cities to rural areas;
• Limited connectivity and digital skills amongst small businesses have made shifting operations to online platforms very challenging.

The RMA for the sesame sub-sector in Uganda shows that agribusinesses anticipate reduced product demand and inability to meet costs of operations – especially if restrictive measures persist beyond the next six months. For micro and small businesses, the outlook is worse with the majority sampled indicating that they would cease to exist as a business in the next 1 to 3 months if the current situation persists. On the other hand, the majority of medium and large agribusinesses do not foresee closure. Furthermore, there is a slightly higher resilience amongst primary agricultural producers and manufacturing firms compared to service sector firms.

In the beans sub-sector, there is an acute lack of working capital as the conventional finance providers have a diminished appetite for risk. Not only have lenders experienced a marked reduction in the volume of deposits, they are also unable to collect repayments on loans that were taken out. The sub-sector has also been affected by a significant attrition of labour complicating the crop in the field and preparations for harvest.

For more information about the findings of the Rapid Market Assessments in Uganda, read the: