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Ugandan Manufacturing Sector Performance Declines as Future Business Outlook Further Dampens

The Business Climate Index (BCI) remained below potential for the fifth consecutive quarter since the first quarter of 2020. Nonetheless, business perceptions in the current quarter (January-March 2021) improved slightly by 19 basis points from 37 in the previous quarter (October-December 2020) to 56 in the current quarter. The meagre improvement in business sentiments was primarily driven by a slight improvement in business activity which improved capacity utilisation and product prices. In particular, a favourable general business environment aided by a return to normalcy during the post-election period improved the general business optimism, increased labour availability and reduced labour cost for doing business in the current quarter. Meanwhile, business perceptions in the manufacturing sector further dampened compared to the previous quarter. This was against the backdrop of less favourable business activity, turnover, reduced capacity utilisation, increased inability to establish and expand new business centres. Perceptions about business sentiments in the next quarter (April–June 2021) are pessimistic about the anticipated rise in input cost, reduced product cost, reduced business activity and inability to establish new businesses.