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Agriculture, Manufacturing Businesses Decline-EPRC

The BCI, conducted by the Economic Policy Research Centre EPRC, reflects the perception of Ugandan business captains on the current and near-future business conditions.
01 Mar 2019 14:53


The latest Uganda Business Climate Index (BCI) indicates that there has been a decline in both manufacturing and agriculture sector indices.

On the other hand, the BCI shows that the service sector index improved.

 

The BCI, conducted by the Economic Policy Research Centre (EPRC), reflects the perception of Ugandan business captains on the current and near-future business conditions.

 

The BCI is, therefore, a perceptions indicator of economic activity and the general business environment in which businesses operate.

 

This BCI looked at the period July to September 2018, suggesting that the economic sentiments might have changed in the last quarter of 2018.

 

Findings indicate that for the period under study, perceptions on the business climate in Uganda declined by 1.68 points, remaining below potential.

 

Perceptions about the manufacturing sector declined by 2.52 points, agriculture sector by 65.16 points, while the service sector improved by 2.16 points.

 

The BCI attributes the significant decline in perceptions about agriculture to a crash in the market price for food grains and cereals, particularly maize.

 

BCI also attributes the decline in perceptions about the agriculture sector to the introduction of withholding tax on agricultural supplies in 2018/19 national budget.

 

The most crucial challenges to doing business, according to the CBI, were electricity availability, macroeconomic factors such as inflation and exchange rates, and access to finance.

 

The BCI adds that even though tax policy was not part of the top three constraints, it became a much more significant issue over the current quarter.

 

Other challenges that persisted included insufficient or reduced demand and competition from substandard products.

 

Despite the decline in perceptions, business managers were more optimistic for the following quarter, with expectations for all three sectors - agriculture, manufacturing and services - projected at above potential.

 

The researchers were Gayathry Venugopal, Corti Paul Lakuma, Job Lakal and Brian Sserunjogi.