Team Europe invests US$140m in SMEs hit by corona virus

UGANDA – Team Europe, countries and organizations from Europe, have announced plans to provide US$140.56 million (USh518 billion) in concessional loans to support small and medium Ugandan enterprises to recover from the impacts of the coronavirus disease pandemic. 

Team Europe comprises of the delegation of the European Union, European financial institutions like the European Investment bank and the German Development bank (KfW), the French Development Agency, the Civil Protection and Humanitarian Aid Operations (ECHO), 10 member state missions to Uganda: Austria, Belgium, Denmark, France, Germany, Hungary, Ireland, Italy, the Netherlands and Sweden, among others. 

In a statement issued recently, Team Europe said they were planning a package to provide access to credit for small and medium enterprises in the sectors most hit by the COVID-19 crisis, adding that the package will also encourage further partnerships between Ugandan and European entrepreneurs

The USh518 million (US$0.14m) contribution is part of the total USh737 billion (US$0.19bn) COVID-19 crisis packages announced by Team Europe. A United Nations Capital Development fund survey last month indicated that up to 85 per cent of the businesses in Uganda will struggle to survive post-coronavirus

Many have already laid off their workers or cut their pay to stay in business, a signal for extreme distress and decline in economic activity. 

This is because efforts to contain the spread of the coronavirus disease have led to production disruptions, caused demand for many goods and services to plummet and forced enterprises to suspend or scale down operations, with enormous impacts for workers and employers. 

Enterprises in the travel, tourism, hospitality, food service, retail and manufacturing sectors have been especially hard-hit, with large portions of their workforce vulnerable to layoffs. 

According to the International Labour Organisation, micro, small and medium-sized enterprises are particularly vulnerable, since they tend to have fewer assets and more limited cash reserves than larger enterprises, as well as lower levels of productivity. 

The agency adds that enterprises operating in the informal economy like Uganda, have limited capacities and resources to cope with the impacts of the crisis because they operate in saturated markets with very limited profits and poor chances of survival. 

It’s on this basis that Team Europe is stepping in to give life to the distressed entities. The support for small businesses will go through local banks, although the timeline when the businesses can start drawing the money is not yet clear. 

In the same statement, Team Europe says its grants to the Ugandan government to combat coronavirus has reached USh219 billion (US$58.14m). This includes the US$33.73 million that the EU gave Uganda in April. 

They hope their contribution will help in the purchase of personal protective equipment, thermos cyclers (PCR machines), extra test kits, mobile laboratories and infrared thermometers to support front line workers in their fight against the spread of COVID-19. 

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