The Ministry of Finance, Planning and Economic Development has reported a steady improvement in economic activity and business conditions in January 2026, even as commercial case backlogs and formal employment figures registered notable shifts.
In its January 2026 Microeconomic Indicators and Developments Update, the Ministry said economic activity continued on a positive trajectory, supported by improved business sentiment and rising consumer demand.
“Economic activity continued to improve in January 2026 on account of improvements in business conditions and increased consumer demand. Business sentiments also showed a positive trajectory, pointing to a brighter microeconomic outlook in the medium term,” the report states.
The report shows that formal employment, as captured under the PAYE register, declined by 23.3 percent from 776,825 employees in December 2025 to 596,194 in January 2026. Similarly, the number of migrant workers recorded by the Immigration Department reduced by 12.1 percent from 3,932 in December to 3,455 in January.
On living standards, monthly inflation for food and non-alcoholic beverages eased by 0.1 percent in January 2026, compared to a 0.5 percent increase in December 2025. Energy, fuels, and utilities inflation remained unchanged during the month. Meanwhile, household expenditure increased significantly by 32 percent from Shs32,748 billion in the fourth quarter of FY2024/25 to Shs43,102 billion in the first quarter of FY2025/26.
Under equity and economic inclusion, financial sector outreach expanded. The number of branches for commercial banks, credit institutions, and microfinance deposit-taking institutions increased by 2.4 percent from 715 branches in September 2024 to 732 in September 2025. Automated teller machines also rose by 4.5 percent from 994 to 1,039 over the same period.
Environmental indicators for Kampala showed slight improvement. “Air quality in Kampala registered a slight improvement, with particulate matter dropping by 20.7 percent from 37.2 micrograms per cubic meter in December 2025 to 29.5 micrograms per cubic meter in January 2026,” the Ministry noted. Noise pollution in the capital also reduced marginally from 64.66 decibels to 64.17 decibels.
However, malaria prevalence increased significantly, rising from 1.2 deaths per 1,000 persons in December 2025 to 2.3 deaths per 1,000 persons in January 2026, signaling emerging public health concerns that could affect productivity.
On competitiveness, liquid energy fuels inflation increased by 0.3 percent in January 2026, mainly driven by a 0.5 percent rise in petrol prices. Export earnings, according to the report, reduced by 7.8 percent between the fourth quarter of FY2024/25 and the first quarter of FY2025/26, even as the monthly trade deficit narrowed by 11.1 percent from $232.3 million in November 2025 to $206.4 million in December 2025. The improvement in the trade balance was largely attributed to higher gold export receipts.
The report also highlights mounting pressure within the justice system. Commercial case backlog increased by 29.8 percent from 1,645 cases in FY2023/24 to 2,135 in FY2024/25. The number of pending commercial cases at the High Court rose by 34 percent, while total pending cases across courts increased by 17.9 percent to 190,793.
To address the growing backlog, government interventions under the Fourth National Development Plan are being intensified. “Government has continued to promote the use of Alternative Dispute Resolution such as mediation and plea bargaining,” the Ministry said, noting that 3,760 cases were completed through plea bargaining in FY2024/25, while 6,803 cases were concluded through mediation.
The Judiciary has also accelerated automation through the Electronic Court Case Management Information System, rolled out in 23 out of 236 court stations, and expanded digital court recording systems to improve efficiency and transparency.
On financial markets, the Uganda Securities Exchange All Share Price Index increased by 6.1 percent from 1,559.97 in December 2025 to 1,655.60 in January 2026. Uganda also scored 66 points in the 2025 Africa Financial Markets Index, ranking third on the continent behind South Africa and Mauritius, reflecting improved investor confidence.
Despite a reduction of 8.7 percent in new business registrations in January, the Ministry maintains that the overall outlook remains positive.
“The thematic focus on competitiveness, particularly reducing commercial case backlogs, is central to strengthening Uganda’s business environment and unlocking growth,” the report emphasizes.
The Ministry reaffirmed its commitment to implementing policy measures aimed at improving access to justice, enhancing productivity, and sustaining macroeconomic stability in the medium term.
