Uganda’s economy showed a mix of growth and cautionary signals in January 2026, reflecting resilience in household consumption alongside challenges in formal employment, exports, and new business formation, according to the Microeconomic Indicators and Developments FY 2025/26.
Data from the Immigration Department and Uganda Revenue Authority (URA) reveal a notable decline in formal employment.
The number of migrant workers dropped by 12.1%, from 3,932 in December 2025 to 3,455 in January 2026, while formal employment under the PAYE register fell sharply by 23.3%, from 776,825 employees to 596,194 over the same period.
Analysts attribute the decline to seasonal adjustments and structural shifts in the labor market, emphasizing the need for policies that stimulate job creation in formal sectors.
Despite the employment setbacks, household spending rose significantly. Quarterly household expenditure surged by 32%, from Shs32,748 billion in Q4 FY2024/25 to Shs43,102 billion in Q1 FY2025/26.
Inflation for food and non-alcoholic beverages eased slightly to 0.1% in January 2026, down from 0.5% in December 2025, while energy, fuels, and utilities inflation remained stable.
The moderation in food prices and steady energy costs provided relief to consumers even as rising expenditure highlights ongoing cost-of-living pressures.
Financial inclusion continued to deepen across the country. The number of branches for commercial banks, credit institutions, and microfinance deposit-taking institutions rose by 2.4%, from 715 in September 2024 to 732 in September 2025, while Automated Teller Machines (ATMs) increased by 4.5%, reaching 1,039 units.
The expansion in financial infrastructure reflects efforts to improve banking access for both urban and rural populations, supporting inclusive economic growth.
Environmental indicators showed modest improvements. Air quality in Kampala improved, with particulate matter falling by 20.7% from 37.2µg/m³ in December 2025 to 29.5µg/m³ in January 2026, while noise pollution slightly decreased from 64.66 decibels to 64.17 decibels.
Public health challenges persisted, however, with malaria prevalence rising from 1.2 deaths per 1,000 persons in December 2025 to 2.3 deaths in January 2026, highlighting productivity and health risks that could affect economic performance.
In energy and market competitiveness, monthly inflation for liquid fuels rose by 0.3% in January 2026, driven by a 0.5% increase in petrol prices.
Industrial power tariffs for medium, large, and extra-large consumers remained unchanged from January to March 2026, providing cost stability for manufacturers.
The commercial court backlog increased by nearly 30%, emphasizing the need for faster dispute resolution to maintain a competitive business environment.
Export performance presented mixed signals. Earnings declined by 7.8%, from Shs9,102 billion in Q4 FY2024/25 to Shs15,185 billion in Q1 FY2025/26.
However, the trade deficit narrowed by 11.1%, from $232.3 million in November 2025 to $206.4 million in December 2025, driven by higher gold exports, which rose from $639.26 million to $823.68 million, alongside growth in other export categories.
Capital markets remained upbeat, with the Uganda Securities Exchange (USE) All-Share Price Index climbing 6.1%, from 1,559.97 in December 2025 to 1,655.60 in January 2026.
Uganda scored 66 points on the 2025 Africa Financial Markets Index, ranking third on the continent behind South Africa and Mauritius.
In contrast, new business registrations fell by 8.7%, from 2,698 in December 2025 to 2,464 in January 2026, reflecting cautious business sentiment amid global uncertainties.
January 2026 thus painted a complex picture for Uganda’s microeconomy. Rising household spending and improved financial inclusion signal growth opportunities, while declines in formal employment, exports, and new business formation highlight areas for policy attention.
Balancing economic growth, environmental sustainability, and social welfare will be critical as Uganda navigates the evolving fiscal landscape in FY 2025/26.