Effect of Covid-19 on small and medium enterprises (SMEs) In Uganda: a case study of Bunamwaya Town

Abstract

This study aimed at establishing the effect of the COVID-19 pandemic on the Small and Medium Enterprises in Uganda specifically looking at the businesses in Bunamwaya Town. The specific objectives of the study were; to find out the effect of COVID-19 on the business revenue, to investigate the effect of COVID-19 on the business sales, to find out how COVID19 has affected the number of employed staff in businesses, to investigate the impact of COVID-19 on the profitability of the businesses and to assess the effect of COVID-19 on the business tax returns. This study used quantitative research design where face to face Interviews were conducted among individual owners of SMEs registered with the Uganda Registration Services Bureau (URSB). A sample size of 100 businesses that employ a maximum 50 people; annual sales/revenue turnover of maximum Ugandan Schillings 360 million and total assets of maximum Ugandan Shillings 360 million was used and each business was represented by its owner or manager. Data was collected using structured questionnaires, cleaned, coded using Microsoft excel. A paired sample t-test was used to establish the change in the variables before and after the outbreak of COVID-19. The study found out that there was a significant reduction in the average monthly business revenue, sales, number of employees, profitability levels and the tax returns due to the outbreak of the COVID-19 pandemic, p<0.0001. Therefore, the study concluded that COVID-19 had a significantly negative effect on the Small and Medium Enterprises in Uganda. The study recommended that there should be inclusive interventions by the government in efforts to revamp the economy that cater for both small and medium enterprise and the large companies. For example, opening up of the economy should not only be for the large companies just because they generate the highest tax revenues. It should be noted that small businesses demand for the products and services from the larger ones. Subsidies and other support should also be provided to the businesses to revive them especially those that had completely closed. The government should create a friendly business environment through provision of credit to these businesses at a lower interest rate to help them break even.