Uganda’s business confidence index slightly improved during the last quarter of 2024/25 on account of a positive commercial outlook in the services sector despite negative sentiments in the manufacturing and agricultural sectors.

 

Latest data compiled by the Economic Policy Research Centre (EPRC) shows the overall business climate index rose from 88.8 points between January and March to 92.5 points between April and June, a reflection of tough economic conditions.

An index score of more than 100 points implies highly positive business confidence levels while a score below 100 points suggests weak confidence levels. On the other hand, an index score of 100 implies neutral business confidence indicators.

The manufacturing sector’s business perception index slightly dropped from 82 points registered between January and March to 80 points recorded between April and June, attributed to widespread power cuts experienced across Uganda following Umeme’s handover of the power distribution network to Uganda Electricity Distribution Company at the beginning of April.

Umeme’s 20-year electricity distribution agreement expired on March 31, 2025 following government’s decision not to renew its power supply contract - a move that eventually triggered an ongoing $292 million buyout dispute between the power distributor and government.“Uganda Revenue Authority (URA) issued many controversial tax assessments to businesses during the last quarter of 2024/25. Those assessments were followed by numerous agency notices that forced some businesses to dig into their working capital to clear those tax bills. Some of those businesses tried to file cases in the Tax Appeals Tribunal (Tat) but we advised against such actions because they would impact their cashflows over time,” explained Jet Tusabe, tax director at BDO Uganda.“For example, a client who received an agency notice valued at Ush500 million ($138,657) was better off negotiating with URA to bring it down to around Ush200 million ($55,463) instead of filing a case at the Tat which would take ages to resolve. Some of the affected businesses are limping right now and are also struggling to pay salaries these days. They also cannot afford to hire top grade tax consultants necessary for handling such crisis situations,” he said.

In comparison, the business perception index captured within the agricultural sector slightly fell from 99 points recorded between January and March to 98 points registered between April and June, partly attributed to falling coffee prices.

Local coffee prices shrunk from a record high of Ush24,000 ($6.7) per kilogramme of premium coffee beans posted in 2024 to roughly Ush10,000 ($2.8)-Ush11,000 ($3.1) registered at the beginning of July 2025 amidst significant, fresh supplies of coffee delivered on the international market by Brazilian and Vietnamese producers last month according to industry sources.“When coffee farmers make lots of money in the market, their spending power shoots up and it benefits those of us that specialise in fast moving consumer goods distribution business. But in case coffee prices go down, their spending power also goes down and it eventually affects our business as well.“There are some taxes that come up in the last quarter of the financial year like corporation taxes while URA is equally under pressure to beat tax collection targets at the same time. The growth outlook for July-September 2025 is quite weak because of the negative impact of school fees payments on family incomes,” said Paul Sine, Chief Executive Officer at PMTS Limited.

The business perception index derived from the services sector rose from 92 points recorded between January and March 2025 to 95 points registered between April and June 2025; a pattern stimulated by optimism surrounding election campaign spending in the run-up to the country’s general elections scheduled for February 2026.

Harsh tax compliance measures adopted by Uganda Revenue Authority (URA) also featured prominently in business owners’ minds during the final quarter of financial year 2024/25.

Uganda’s total tax collections amounted to Ush31.63 trillion ($8.8 billion) for financial year 2024/25 against a target of Ush31.37 trillion ($8.7 billion), representing a surplus of Ush262.43 billion ($72.8 million), URA data shows.

Uganda’s economic growth rate slightly increased from 6.1 percent in financial year 2023/24 to 6.3 percent in financial year 2024/25, according to official data.

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