Free Access | 2024-04-12

Uganda’s Business Climate Slightly Improves and Businesses Remain Optimistic

Authors/Editors: Rehema Kahunde ,  Hildah Namuleme ,  Joab Wamani

Abstract:

The Business Climate Index (BCI) improved marginally by 3.7 index points from 88.8 in the previous quarter (January-March 2025) to 92.5 in the current quarter (April-June 2025). Increased business activity, sales turnover, profitability, and improved selling prices are responsible for the slight increase in business sentiment during the current quarter. The improvement in perceptions of business conditions appeared across all business segments, but was more pronounced among large businesses, mainly attributed to the continued growth in consumer demand, especially around the Easter season in April. At the sectoral level, business sentiments within the service sector registered slight improvements of 2.4 index points, rising to 94.7 in the current quarter from 92.3 in the previous quarter, emanating from improved sentiments on product prices, increased capacity utilisation and increased profitability. On the contrary, sentiments in the agriculture and manufacturing sectors slightly declined by 1.0 and 1.7 index points to 98.3 and 79.9 from 99.3 and 81.6, respectively. The deterioration in business sentiment within the agriculture sector is partly because of several factors, including reduced business activity, turnover and low capacity utilisation—owing to declining coffee prices due to global market forces. Executive Summary Nonetheless, the near-term business sentiments (July-September 2025) indicate anticipated improvements in conditions for doing business by 7.8 index points from the current 92.5 index points to 100.3 index points in the next quarter. The expected favourable business conditions are attributed to a projected improvement in the general business optimism, especially the pickup in demand due to the expected political spending, which is likely to increase business activities, sales turnover as well as issuance of new business orders