Corporate
Uganda’s Private Sector Maintains Growth Momentum Amid Rising Costs, Strong Demand
Uganda’s private sector sustained its growth trajectory in July, fueled by robust demand and new client wins, despite a marginal dip in the Stanbic Bank Purchasing Managers’ Index (PMI) to 53.6 from 55.6 in June. The PMI, a key gauge of business conditions, remains above the 50.0 threshold that separates expansion from contraction, indicating continued overall improvement in the private sector.
The latest Stanbic Bank PMI report highlights that business activity and new sales remained the primary drivers of the upturn, with growth recorded across a broad range of sectors. Companies in Uganda have been actively expanding their workforce, employing both temporary and permanent staff to meet rising demand. The manufacturing sector was the only exception, experiencing a slight decline in employment, reflecting sector-specific challenges.
Rising input costs, attributed to higher purchase prices and increased wage bills, led many firms to raise output charges. Despite this, businesses expressed strong optimism about future growth, anticipating increased customer numbers and sustained favourable demand conditions.
“Uganda’s private sector continues to demonstrate resilience amid challenges,” said Christopher Legilisho, Economist at Stanbic Bank. “The Stanbic Bank PMI signals further expansion in July, marking the sixth consecutive month of improvement in business conditions. Growth has been driven primarily by new orders and higher business activity, which bodes well for the private sector’s performance in the coming months.”
The report also noted that the growth in business activity and new orders led to the first accumulation of backlogs of work in seven months. To cope with this demand, firms have been increasing staffing levels and boosting purchases of inputs. However, a decline in vendor performance was observed, reflecting supply chain pressures that companies are navigating alongside rising costs.
Despite these challenges, business sentiment remained positive. Many firms cited expectations of greater sales volumes, improved customer retention, and continued expansion as reasons for their optimism. Service-oriented sectors, in particular, reported stronger client acquisition, while trade and retail segments benefited from heightened consumer spending.
Analysts say the resilience of Uganda’s private sector reflects broader economic stability and effective adaptation strategies by businesses. “Even as input costs rise, companies are finding ways to manage operational pressures while maintaining growth,” said Legilisho. “This indicates a private sector that is not only resilient but also increasingly capable of sustaining expansion under challenging conditions.”
Overall, the July PMI data underscores that Uganda’s private sector remains on a positive trajectory. While rising costs and vendor delays present short-term challenges, the combination of strong demand, new client wins, and workforce expansion points to sustained growth and a favourable outlook for the coming months.
Experts note that continued monitoring of input costs, supply chain efficiency, and sector-specific performance will be crucial to maintaining momentum, especially in manufacturing and export-oriented industries. With private sector confidence holding firm, Uganda’s economic growth prospects appear robust, supported by a dynamic business environment and rising entrepreneurial activity.
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