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Lack of information is affecting business operations under the Africa Continental Free Trade Area

The Business Climate Index (BCI) improved from 89 in the previous quarter to 91 in the current quarter under review (January to March 2023). Despite the improvement, the conditions for doing business remained below potential. Input costs, production cost, activity, turnover, capacity utilisation and profit drive the improvement.

The improvement is across all sectors, with the agriculture sector having the biggest improvement. In the current quarter ended March 2023, Tax policy, macroeconomic factors, insufficient demand, electricity availability, and access to finance was the major constraint to business operations.

These same challenges prevailed in the previous quarter ended in December 2022, indicating that business changes in Uganda are persistent. The next quarter’s projections indicate that the condition for doing business is expected to improve to 111.9, which is above its full potential. This comes against the backdrop of the expected improvement in all sub-indices and a further easing of global inflation pressures.

The manufacturing sector is projected to have the greatest improvement in the conditions of doing business, followed by the services sector and agriculture sector, respectively. The projected indexes for the manufacturing, service, and agriculture sectors are 116, 112 and 93, respectively. Notably, many of the businesses lack sources of information about the African Continental Free Trade Area (AfCFTA), and most of them are unaware of the AFCFTA. As a result, many are most likely to attain very little gains from trading under AfCFTA

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