Free Access | 2024-04-12

Uganda’s Business Climate Slightly Declines but Optimism Remains

Authors/Editors: Emmanuel Erem (PhD) ,  Hildah Namuleme ,  Mudoko Eric

Abstract:

The Business Climate Index (BCI) declined marginally by 2 index points from 91 in the previous quarter (October-December 2024) to 89 in the current quarter (January- March 2025). Reduced business activity, sales turnover, declining profitability, and reduced capacity utilization caused the slight decline in business sentiment during the current quarter. The decline in perceptions of business conditions appeared primarily among micro and small businesses. At the sectoral level, business sentiments within the manufacturing sector registered slight improvements of 5 index points, rising to 82 in the current quarter from 77 in the previous quarter, emanating from improved sentiments on product prices, increased capacity utilization and increased profitability. However, sentiments in the agriculture sector slightly declined by 4 index points to 99 from 103. The deterioration in business sentiments within the agriculture sector is partly due to reduced business activity, labour availability and low profitability—owing to unfavourable weather for the agricultural activities during the quarter. Nonetheless, the near-term business sentiments (April-June 2025) indicate anticipated improvements in conditions for doing business by 10 index points from 89 index points in the current quarter to 99 index points next quarter. The anticipated favourable business conditions in the upcoming quarter are attributed to a projected improvement in the general business environment, with a pickup in demand due to the onset of the Easter season, which increases business activity, sales turnover, as well as business profits.