Estimating income losses and consequences of the COVID-19 crisis in Uganda

COVID-19 continues to take its toll on the world and more recently, the African continent. While the continent still accounts for fewer cases or deaths, in cities such as Uganda, the incidence of the disease has risen sharply.

Uganda is not new to infectious diseases and has successfully battled outbreaks of Ebola, Marburg and even HIV/AIDS. Whilst COVID-19 has relatively lower mortality rates than these previous outbreaks, it poses a serious threat owing to three key factors: its low detection rate, its high transmission rate, and lastly, surrounding uncertainty about the novel virus – its treatment and long-term impact.

The Ugandan government conducted country-wide restrictions on the movement and congregation of people. Whilst similar restrictions have been adopted all over the globe, such measures in developing countries (like Uganda) will undoubtedly have a disproportionate impact on the livelihoods of poor households and small and informal businesses.

This project seeks to use the most-recent National Household Survey of FY2016-17 and internationally recognised methodology (developed by CEQ) on assessment of fiscal incidence; to answer the following questions:

1. How much does poverty (gap/severity) and inequality change if we eliminate informal income in Kampala and other cities, due to the lockdown?
2. How much income is lost if informal income in cities is eliminated? This gives a sense of how much money the government would need to offset the income effect of the lockdown.
3. Given it is not practical to offset each household’s income losses precisely, how large would a uniform transfer for those in Kampala (or other cities) need to be to offset the poverty effect of complete loss of informal income?
4. How much could the Government save with simple targeting of that transfer by, say, excluding those with public sector jobs (or other exclusion criteria that may seem reasonable)?