Uganda’s economic response to COVID-19: the case for immediate household relief

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Pleased to share that I recently contributed a bit to a smart policy brief from the Centre for Development Alternatives in Kampala about options for economic relief to households during the pandemic.  Some background on who’s likely to need support:

According to the Centre for Budget and Tax Policy, 7 million Ugandans need social protection. The Centre’s report argues that the groups most affected by the economic disruption caused by the pandemic are workers in the informal sector (4 million people), the elderly (2 million), private sector employees (800,000), and low-level civil servants (150,000).

Our estimates of the total number of informal workers are considerably higher than those of the Centre for Budget and Tax Policy, which are based on projections using 2014 data. Last year, CDA looked at at the latest available UBOS data from the 2016-17 National Household Surveys. That study found that there are about 9.1 million employed people in the economy, excluding subsistence farmers. Of the 9.1 million employed, UBOS estimates that 85% are in informal employment. This implies that there are roughly 7.7 million informally employed people (85% of 9.1M) in Uganda – much higher than the estimate of 4 million cited above.

How can people in the informal sector be reached?

The government is already working with Local Councils (LCs) in identifying households for the ongoing food distribution efforts (discussed below). However, this presents some risks. LC leaders are likely to identify those that identify with the local council authority in the area – for instance through some form of registration. But most informal sector workers (e.g. those working in salons, car-wash, tax conductors, vendors, etc.), do not necessarily register with local authorities. Further, LC leaders are often trapped in local level politics and may be prone to politicising the distribution of goods. Involving Community Based Organisations, religious organisations, and NGOs to support the distribution efforts could help act as a check on local politicians while also contributing to the effectiveness of the response.

What sorts of support do people need?

We briefly explore four channels through which protection to households that depend on incomes from the informal economy can be delivered:

  1. Increasing household purchasing power (e.g. cash transfers);
  2. Decreasing the cost of essential goods and services (e.g. rent, utilities, food, soap, cooking fuels);
  3. Distributing essential goods and services for free; and
  4. Maintaining the flow of essential goods.

Do check out the full recommendations in the brief!