Free Access | 2024-04-12

Business environment improved amid continued depreciation of the Kenya Shilling.

Authors/Editors: Corti Paul Lakuma ,  Emmanuel Erem (PhD) ,  Hildah Namuleme ,  Joab Wamani

Abstract:

The Business Climate Index (BCI) improved from 78 index points in the previous quarter to 109 in the quarter under review (October to December 2023). The improvement in the business environment sentiments is mainly explained by the enhancement in the business environment, the increase in labour availability, and the improvement in capacity utilization over the quarter. The agriculture sector registered a decline of 12 index points, from 89 in the previous quarter to 77 in the quarter under review. The manufacturing and services sectors registered improvements of 16 and 6 index points, from 80 and 77 to 96 and 83 respectively. Over the quarter ended December 2023, unfavourable tax policy, worsening macroeconomic factors, insufficient demand, limited electricity availability, limited access to finance, and corruption and bribery were highlighted as the major constraints to business operations. The same challenges prevailed in the previous quarter ended September 2023, indicating that business challenges in Uganda are persistent. The near-term business sentiments indicate that conditions for doing business are expected to decline, from 105 to 103. The indices for the agriculture, service, and manufacturing sectors are expected to increase from 77, 96 and 83 to 82, 100 and 100, respectively. Of the businesses surveyed, 36.4 percent of them were affected by the depreciation.