The economic impacts of COVID-19 have changed how business is conducted and how firms manage uncertainty and risks. The inability to transport goods to their destinations within the required time, coupled with reduced or stalled demand from customers due to customer’s lack of cash has weakened businesses. Processors have faced delays in buying produce from rural farms and have experienced an inability to source commodities from farmers due to lockdown and travel-related restrictions. Limited access to inputs such as seeds, fertilizers, and pesticides, from a lack of funding and challenges with transportation, have negatively impacted productivity in the agricultural sector. A majority of the businesses have struggled with managing inventory, avoiding stock outs, and missing sales due to disruptions in their distribution channels, caused by curfews and border closures, and customer demand fluctuations. Across firms, these disruptions have affected working capital needs and the ability of business owners to predict incoming cash flow. Firms are assessing these costs and making operational changes such as opting for contact-free, digital payment solutions, when possible.
USAID through the Feed the Future Uganda Inclusive Agricultural Markets (FtF IAM) activity has partnered with Open Capital Advisors (OCA), a business management and financial advisory firm, to support agribusinesses to withstand shocks and stresses due to COVID-19 related disruptions and uncertainty. OCA began with a business needs assessment to understand and inform what tools agribusinesses need to adapt and manage financial risks and identify firms needed to be able manage fluctuations in supply and demand, working capital forecasts, and assess profit and loss in multiple scenarios. In response, OCA developed a scenario planning tool and has worked with five agribusinesses to test the tool, from agri-input suppliers to commodity traders. Using the tool, agribusinesses forecast supply and demand and the associated cash flow implications for their base case and multiple scenarios. An OCA business analyst supports each enterprise part time, building capacity to use the tool themselves and offering technical support in the deployment of the tool and adaptations needed.
Early feedback from the firms has been positive and OCA is considering adapting the tool to suit non-COVID scenarios to expand how the tool can be applied to improve operational performance and assess investments in new technologies and innovative marketing and customer service strategies. OCA will share the tool publicly and provide brief consultations to up to 15 businesses on how to use the tool, which is open source that will be made available to any agribusinesses or business advisors interested in using it. Showcasing the tool through demonstrations will also allow OCA to scale its advisory services to Ugandan agricultural firms and contribute to greater financial management capacity for small and medium-sized businesses in Uganda.