Uganda’s private sector registers growth

Data collected between 10 and 29 October 2024 attributes this improvement largely to rising aggregate demand, prompting firms to increase their output and hire additional staff.

Demand-Driven Expansion Across Sectors

The growth in Uganda’s private sector is supported by a surge in aggregate demand, allowing companies across multiple industries to capitalise on the favourable conditions. Increased spending on advertising, as well as efforts to improve product quality, have contributed to the heightened demand.

According to Mulalo Madula, a Senior Analyst at Stanbic Bank, “The latest PMI data for Uganda indicated a sustained expansion in the Ugandan private sector, marking the seventh consecutive month of growth. The persistent increase in output reflects favourable demand, prompting companies, particularly in the manufacturing sector, to hire more staff, even as backlogs of work declined.”

This continued expansion underscores the resilience of Uganda’s private sector, with manufacturing and other sectors responding positively to economic conditions by scaling up operations and recruitment efforts.

Challenges Remain in Achieving Economic Development

Despite the growth in private sector output, the impact on the quality of life for the average Ugandan remains uncertain. Economic growth, as reflected in the PMI data, represents a quantitative increase in goods and services. '

However, true economic development, which implies both qualitative and quantitative improvements, remains elusive for many Ugandans. While national income rises, questions remain about the distribution of wealth, with concerns that not all citizens benefit equally from the economic gains.

This distinction highlights the need to address underlying issues of income inequality and poverty, raising questions about who truly benefits from Uganda’s economic growth.

Stanbic PMI as an Indicator of Business Health

The Stanbic Bank Uganda PMI is compiled by IHS Markit, based on responses from purchasing managers across approximately 400 private sector firms.

The survey covers key sectors including agriculture, mining, manufacturing, construction, wholesale, retail, and services, providing a comprehensive view of business conditions.

A PMI reading above 50.0 signals an improvement from the previous month, while readings below 50.0 indicate a decline.

This index serves as a valuable tool in gauging Uganda’s private sector performance, offering insights into economic trends and helping businesses and policymakers track sectoral changes month by month.