Business conditions in Uganda’s private sector continue to improve in January

The Stanbic Bank Purchasing Managers Index (PMI) for the month of January has continued to point towards a healthy private sector posting a headline rating of 57.5 in January, up from 56.6 in December. This is the twenty-fourth successive monthly improvement. The report attributed this performance to stronger customer demand. Output, new orders and employment also increased in the latest survey period.

Commenting on January’s survey findings, Jibran Qureishi, Regional Economist E.A at Stanbic Bank said: “Domestic demand is clearly picking up, and we suspect this trend will carry through for the most part of this year. Of course, if a Final Investment Decision (FID) is made for the oil sector, GDP growth could possibly expand by 6.5% y/y in 2019. However, for this to manifest, weather conditions need to remain favorable to sufficiently boost the agriculture sector.”

The report also revealed that with new orders increasing, firms took on extra staff accordingly. Job creation was registered across the agriculture, industry, services and wholesale and retail sectors. Increased operating capacity meant that companies were able to keep on top of workloads in spite of continued new order growth.

Overall input price inflation was recorded in January, with panelists linking the latest rise to higher prices for electricity, fuel and water. Overall input cost rises were recorded in four of the five broad sectors, the exception being agriculture where no change was signaled.

Benoni Okwenje, Stanbic Bank’s Fixed Income Manager said: “Signs of stronger customer demand resulted in a further expansion of new business in January, extending the current sequence of growth to two years. Ugandan companies raised output as a result.As a bank we expect Uganda’s growth trajectory will keep rising as macro-economic indicators remain bullish.”

Further, companies responded to higher input costs by raising their output prices accordingly. That said, there were some reports of firms offering discounts in order to secure sales.

“Increasing customer demand encouraged Ugandan companies to raise both their purchasing activity and inventory levels at the start of the year. Despite rising demand for inputs, suppliers’ delivery times shortened again amid transport infrastructure improvements and timely ordering,” the report concluded.

About Stanbic Bank Uganda

Stanbic Bank Uganda is a member of the Standard Bank Group, Africa’s largest bank by assets. Standard Bank Group reported total assets of R2 trillion (about USD165 billion) at 31 December 2017, while its market capitalization was R317 billion (about USD28 billion).

The group has direct, on-the-ground representation in 20 African countries. Standard Bank Group has 1 221 branches and 8 815 ATMs in Africa, making it one of the largest banking networks on the continent. It provides global connections backed by deep insights into the countries where it operates.

Stanbic Bank Uganda provides the full spectrum of financial services. Its Corporate & Investment Banking division serves a wide range of requirements for banking, finance, trading, investment, risk management and advisory services. Corporate & Investment Banking delivers this comprehensive range of products and services relating to: investment banking; global markets; and global transactional products and services.

Stanbic Bank Uganda personal & business banking unit offers banking and other financial services to individuals and small-to-medium enterprises. This unit serves the increasing need among Africa’s small business and individual customers for banking products that can meet their shifting expectations and growing wealth.