KAMPALA
Business confidence across Uganda surged in the second quarter of 2026, according to new survey data released in early August by the Economic Policy Research Centre (EPRC), Uganda's leading independent economic think tank. The EPRC's Business Climate Index (BCI) rose by 20.1 points to 124.9 for the April–June quarter, up sharply from 104.8 in the January–March quarter. Because any reading above 100 signals that firms expect conditions to improve rather than deteriorate, the jump represents one of the more pronounced swings in sentiment the index has recorded in recent years. But the same survey, and the reporting built around it, is unusually blunt about how fragile that optimism is — businesses are simultaneously contending with an Ebola outbreak's economic fallout, a Middle East conflict pushing up fuel costs, and structural problems like unreliable electricity that have dogged Ugandan firms for years.
The Business Climate Index is EPRC's quarterly gauge of how firms across sectors feel about current operating conditions and their expectations for the quarter ahead, drawing on surveys of companies across manufacturing, services, agriculture, trade, and other sectors. The latest reading's improvement was driven primarily by favorable expectations for the July–September quarter rather than a dramatic change in firms' assessment of current conditions, according to EPRC's own summary of the findings. At the sectoral level, services posted the largest gains in current operational sentiment, with agriculture also improving, while the industrial sector recorded a slight decline — a divergence that points to an uneven recovery rather than a broad-based one.
The rebound comes against a genuinely difficult operating backdrop. EPRC's own analysis, published alongside the index, links much of the lingering cost pressure facing Ugandan businesses to renewed conflict in the Middle East, which has disrupted global energy markets and pushed up fuel prices worldwide. For a landlocked economy like Uganda's, which depends heavily on imported fuel transported overland from coastal ports, that translates directly into higher transport, shipping, and freight costs that ripple through nearly every sector. Businesses surveyed pointed to these elevated input costs — alongside taxation and Uganda's persistently unreliable electricity supply — as their most pressing operational concerns even as their outlook for the coming quarter brightened.
Compounding the cost pressures has been the public health toll of an Ebola outbreak that affected the country earlier in 2026. According to reporting on the EPRC data, the outbreak affected an estimated 40.7 percent of businesses surveyed, with accommodation, transport, and health-related services among the hardest hit sectors. Nearly half of the businesses that reported being affected also said they lost customers as a direct result — a reminder that Uganda's tourism and hospitality sectors, still recovering from earlier shocks, remain acutely exposed to public health scares. Uganda's Ministry of Health had declared an end to the Bundibugyo virus disease outbreak on July 28, following 42 days without a new locally transmitted case, which should ease some of that pressure looking into the third quarter, though the survey window captured the outbreak's active economic impact.
Uganda's electricity distribution problems also feature prominently in the current business climate conversation. Separately from the EPRC release, members of Uganda's Parliament have raised concerns in recent weeks about the Uganda Electricity Distribution Company Limited (UEDCL) over persistent delays in connecting businesses and households to the national grid and continued blackouts in various parts of the country — an infrastructure gap that EPRC's own commentary on the Business Climate Index has flagged as a recurring drag on firms' operating costs and reliability planning.
Set against this backdrop of near-term volatility is a considerably more optimistic macroeconomic story building in the background: Uganda's long-anticipated transition into oil production. The Petroleum Authority of Uganda has reaffirmed that the country remains on track for first commercial oil production in the second half of 2026, with the flagship Tilenga project reported at 74 percent completion and 234 wells drilled as of end-June — comfortably above the 170-well minimum required for the start of production — while the Kingfisher development has reached 79 percent completion, with its central processing facility and feeder pipeline nearing readiness. Uganda's government is projecting the country will post double-digit GDP growth, around 10.2 percent, in the 2026/27 fiscal year on the back of oil coming online, which would mark the country's first return to double-digit growth since the structural reforms of the 1990s. Budget planners are forecasting roughly 1.44 trillion Ugandan shillings in direct oil and gas revenue for the coming fiscal year — the first time oil money will flow into Uganda's national budget rather than the other way around. Uganda's overall GDP is projected to climb toward the $66 billion mark in 2026, according to the Uganda Investment Authority, up from an estimated $59.3 billion currently, with growth forecasts of 6.2 percent for 2026 broadening to 8.0 percent in 2027 as extractive-sector investment, agro-processing, and agricultural productivity gains compound.
The tension between these two stories — a real but fragile quarter-on-quarter improvement in day-to-day business sentiment, and a much larger structural growth story tied to oil that is still months from delivering its first revenues — is likely to define how Ugandan firms and policymakers talk about the economy through the rest of 2026. For small and medium-sized enterprises in retail, wholesale trade, education, and transport, EPRC's data shows competition from other businesses has emerged as their single most common concern, ahead even of costs, suggesting that even as macro conditions improve, competitive pressure within a still-informal-heavy economy is intensifying. Medium-sized firms in accommodation and information services, meanwhile, flagged reduced consumer demand as their dominant worry — a signal that household spending power has not yet caught up with improving business sentiment at the top line.
What to watch next: whether the anticipated July–September improvement in the Business Climate Index actually materializes when EPRC releases its next quarterly survey, given that fuel-price pressure from the Middle East conflict shows no clear sign of easing; how quickly the formal end of the Ebola outbreak translates into a rebound for tourism, hospitality, and transport bookings; and whether Uganda hits its self-imposed second-half-2026 deadline for first oil, which the government and private investors alike are treating as the pivotal event for the country's medium-term growth trajectory.
