Kampala, Uganda | JULIUS BUSINGE | Ugandan businesses are feeling more confident about the months ahead, but rising fuel prices, high operating costs and global uncertainty are threatening to slow the recovery.
After a difficult start to the year, companies across the country reported a sharp improvement in business confidence between April and June 2026, according to the latest Uganda Business Climate Index published by the Economic Policy Research Centre (EPRC).
The Business Climate Index rose by 20.1 points to 124.9 during the quarter, up from 104.8 between January and March.
A reading above 100 indicates that businesses expect conditions to improve, while a score below 100 suggests a decline in confidence.
The latest figures suggest that many companies are looking beyond current challenges and expecting stronger economic activity in the second half of the year.
But economists warn that optimism alone will not be enough. Businesses are still struggling with higher costs caused by global events, including renewed conflict in the Middle East, which has disrupted energy markets and pushed up fuel prices.
For companies in Uganda, the impact has been felt through higher transport costs, more expensive imports and increased production expenses.
The result is a mixed picture: businesses are more hopeful about the future, but many are still operating under pressure.
Confidence rises as demand expected to improve
The strongest improvement came from businesses’ expectations for the July–September quarter.
Companies surveyed by EPRC said they expected customer demand to increase, business activity to improve and product prices to become more favourable.
The positive outlook was partly linked to seasonal changes in Uganda’s economy. The country’s first harvest season is expected to increase agricultural production while creating more activity for transport companies, traders, wholesalers and retailers.
Agriculture remains a central part of Uganda’s economy, supporting millions of households and supplying raw materials to other industries.
However, the report cautions that the recovery remains fragile because many businesses are still facing higher costs.
The increase in global oil prices has affected everything from fuel purchases to the cost of moving goods across the country.
For small businesses, which often operate with limited financial reserves, rising expenses can quickly reduce profits.
The services sector leads recovery
The recovery has not been the same across all parts of the economy. The services sector recorded the biggest improvement in business confidence.
Sentiment among service providers moved from negative 28.0 percentage points in the previous quarter to positive 21.9 percentage points.
The improvement was supported by stronger customer demand and increased commercial activity.
Businesses involved in transport, trade, hospitality and other services reported better expectations as economic activity picked up.
Agriculture also showed signs of improvement, although confidence remained negative. The sector’s sentiment improved from negative 43.0 to negative 27.9 percentage points.
