Free Access | 2024-04-12

Perceptions of doing business decline, on account of pessimistic outlook

Authors/Editors: Rehema Kahunde ,  Mudoko Eric ,  Steven Katende

Abstract:

Uganda’s Business Climate Index (BCI) declined during the quarter October–December 2025, by 25.5 index points from 125.6 to 100.1, signaling weakening business sentiments largely driven by pessimistic expectations about the near-term economic outlook. Particularly, business expectations for the January–March 2026 quarter remain subdued on account of anticipated weakened capacity utilisation, rising input costs and reduced profitability. The subdued business outlook emerged with the uncertainty that is associated with the General Election season. At the sectoral level, business sentiments across all sectors registered an improvement in the quarter under review. The industry sector registered the highest improvement, rising to 9.8 percentage points in the October-December 2025 quarter from -23 in quarter July-September 2025. Nonetheless, near term business perceptions (January-March 2026 quarter) are anticipated to decline in the agriculture and service sectors while those in the industry shall improve. During the current October-December 2025 quarter, increased competition between businesses within the same sector, reduced demand, and poor transport infrastructure were top challenges of doing business in Uganda.