Free Access | April 2026

Middle East conflict affects the business environment in Uganda

Authors/Editors: Brian Sserunjogi (PhD) ,  Rehema Kahunde ,  Hildah Namuleme ,  Hewetson Ainembabazi

Abstract:

Uganda’s Business Climate Index (BCI) increased marginally by 4.7 index points to 104.8 during the January-March 2026 quarter, from 100.1 registered in the October-December 2025 quarter. The index captures two issues-the business situation and business outlook sentiments. The marginal improvement in the BCI was largely driven by positive business outlook sentiments for the April-June 2026 quarter. Nonetheless, the business situation declined in the January-March 2026 quarter on account of the ongoing Middle East crisis due to US-Israel war with Iran. Indeed, over 60 percent of the businesses surveyed reported having been affected by the war, mainly through the rising fuel, shipping and freight costs. At the sectoral level, business situation sentiments across all sectors registered a decline in the quarter under review. The agriculture sector registered the highest decline, falling to -43.0 percent in the January-March 2026 quarter from 19.1 percent in October-December 2025 quarter. During the current quarter, the top business challenges in Uganda were increased competition between businesses within the same sector, reduced consumer demand, increased tax enforcement as well as delays in getting new electricity connections.