Closure of the Rwanda Uganda Border and the Delay in Seasonal Rainfall Affects the Business Climate

The Business Climate Index (BCI) declined by more than eleven basis points from 107.02 in the previous quarter (October-December 2018) to 95.61 in the current quarter (January-March 2019). The above changes were largely driven by deterioration in performance in the agriculture and service sectors. Business perception in the agriculture sector was affected by closure of the Rwanda-Uganda border and delay in onset of seasonal rainfall in most parts of the country. The negative effects of unfavourable weather on business climate were exacerbated by poor perceptions of labour availability, decreasing profits, reduced business activity, underutilization of capacity and unfavourable overall business environment during the quarter. Nonetheless, perceptions about future business sentiment (April – June 2019) indicate improvement in business performance largely driven by anticipated increase in profits, new businesses, capacity utilisation, decline in input costs, increase product cost, and general business optimism. Business sentiments across all sectors is to remain above potential in next quarter (April –June 2019).