Briefing Paper

Above Normal Rainfall Dampen Business Climate Environment; Future Outlook Remains Subdued

The Business Climate Index (BCI) slightly improved by four percentage points from 100.8 in the previous quarter (July-September 2019) to 104.9 in the current quarter (October-December 2019). The slight improvement was largely driven by improvement in business perceptions in the services sector. The favourable perceptions in the services sector are attributed to the rapid expansion of the banking service using the agent banking model across the country as well as entry of new players in Uganda’s financial subsector. However, the positive perceptions in the services sector were offset by the deterioration in both the agriculture and manufacturing sectors. The large drop in the agriculture sector emanated from onset of prolonged above normal rainfall that caused flooding, while the continued closure of the Uganda-Rwanda border continues to dampen perceptions in the manufacturing sector. Business expectations for the next quarter (January – March 2020) remain subdued on the account of anticipated decline in sales turnover, profitability and new business establishments.