PRIORITIZE FINANCIAL INCLUSION FOR SUSTAINABLE GROWTH IN POST COVID-19 PERIOD

Published by Patra K on

Prioritize financial inclusion for sustainable growth in post COVID-19 period

A vendor at a market in Kampala, Uganda.The country is struggling with a second wave of COVID-19. (Photo courtesy of Global Times)

Economic insecurity is on the rise due to COVID-19 in emerging economies like Uganda. A decade-long poverty eradication efforts have been reversed due to the weakening of economic structures at micro and macro levels. 

The economy has been projected to grow at 4.3% per annum in contrast to 6.7% pre-COVID 19 annual growth. 

This comes at a time when Uganda has received Ugx 3.5 trillion ($980.3 million) from the International Monetary Fund (IMF). Ministry of Finance Planning & Economic Development (MoFPED) has also appropriated Ugx 600 billion ($168.6 million) to provide buffer support for COVID 19 response. Ugx 373 billion ($104.4 million) has already been released. Uganda also has a new political leadership (2021-2026) which is believed to be a game-changer for Uganda’s development trajectory based on the “fisherman theory” of President Museveni. 

The priority for this political leadership should be long-term financial inclusion through structured investment in micro, small and medium economic production for the groups the Prime Minister’s office has cut out as “vulnerable”. 

Previous efforts on the same were hampered by political corruption and it is obvious that most poverty alleviation programs have gotten sub-optimal results. The National Development Plan III provides a basis for private sector-led inclusive growth and public sector reforms to strengthen governance and transparency.

COVID-19 presents an uphill task for the political leadership to “wake up from slumber” and engage in politics that works for the citizenry through meaningful appropriation, oversight, and representation and also ensure sustainable, small but consistent incomes at the household level. 

The President has instituted tighter containment measures for COVID-19 and a significant number of the populations have severely violated them because they are economically vulnerable. The state is disproportionately investing much money in enforcement of COVID -19 prevention measures as opposed to addressing the economic hardships forcing people not to stay at home. Out of the Ugx 373 billion ($104.4 million) that has already been released, over Ugx 40 billion ($11.4 million) has been allocated to security agencies cumulatively to enforce COVID-19 related measures.

Economic insecurity breeds behavioral indiscipline as citizens care more about survival as opposed to compliance. The absence of the safety nets through functional basic public services like health aggravates the situation setting in motion the dictates of the law of the jungle to apply. This explains why majority of the ordinary Ugandans must access the urban centers to earn and survive. 

Even the COVID relief to the vulnerable is merely a drop in the ocean that can’t sustain a household for over a month of lockdown without economic activity to take care of daily basic needs. Let’s not forget that majority are not going to benefit from the government COVID-19 relief package of Ugx 100,000 ($28).

The “new political leadership” should consider enabling every household to have an active economic production unit. The state may not have sufficient resources to cover all households but sufficient coverage can create a ripple effect of economies of scale, increase aggregate demand and supply, and velocity of money. Households in Uganda are endowed with a local indigenous knowledge resource that if tapped into and prepared through research, innovation, and training can result into household and community economic surplus. 

Political leaders must learn from the previous mistakes that past poverty alleviation projects failed due to lack of training and preparation by the targeted recipients of investment funds. Investing in economic production and hence increasing disposable income implies that the population can contribute financing towards the acquisition of basic goods and services and ultimately live a quality life. 

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