African Private Sector Shows Promising Growth Amid Global Uncertainty
An analysis of S&P Global’s latest Purchasing Managers’ Index (PMI) data reveals that Africa’s private sector demonstrated robust growth in the first quarter of 2026. Despite prevailing global uncertainties related to the US-Israel-Iran conflict, several African nations reported expansion in their business activities.
The PMI readings illustrate a rebound in business momentum across the continent, even as rising energy costs and disruptions in supply chains are exerting pressure on input prices and operational conditions.
Among the eight African countries surveyed, six experienced an uptick in business activity in the first quarter, a notable increase from five during the same period last year and just three in the first quarter of 2024. Only Egypt and Ghana reported a decline in performance.
Often regarded as a high-frequency indicator, the PMI tracks shifts in gross domestic product (GDP). A reading above 50 signifies improvement in economic conditions, while a figure below 50 corresponds to a decline. The index is constructed from survey responses of purchasing managers at approximately 400 private firms, reflecting different sectors and company sizes based on their contributions to GDP.
Cost Pressures Weigh on Egypt and Ghana
Egypt recorded the lowest performance among the surveyed countries, with an average PMI of 48.9. The ongoing Middle East conflict has led to significant raw material cost increases, prompting a sharp rise in input prices in March—the most substantial since late 2024.
According to the report, Egyptian companies saw a dramatic reduction in business activity in March, attributing this decline to the impacts of regional conflicts that both diminished demand and pushed prices higher. The PMI for Egypt, which gauges the non-oil economy, fell to its lowest level in nearly two years.
The report noted an accelerated decline in new sales, as companies expressed growing pessimism about future activities for the first time on record. Despite this disappointing performance, the Arab PMI remained slightly above the 2024 average of 47.6, indicating a modest underlying improvement.
For Ghana, the PMI held steady at 49.7, mirroring the previous year’s figure, even as inflation began to ease. This situation highlights the lag between price stabilization and actual economic recovery.
Uganda Leads Demand Growth in the Region
Uganda emerged as the star performer in the first quarter, with its PMI climbing from 51.7 to 53.8. This growth is attributed to strong demand conditions, increased production, and enhanced employment levels.
Stanbic Bank economist Christopher Regirisho highlighted that the Stanbic Uganda PMI for March 2026 indicated sustained growth within the private sector. Companies reported expansions in production, new orders, and employment, pointing to a robust macroeconomic environment and strong consumer purchasing power. Increased demand resulted in larger backlogs and a rise in new orders.
Despite the prevailing global uncertainties, businesses in Uganda remain optimistic about production over the next year, bolstered by an uptick in purchasing activities and inventory accumulation, reflecting confidence in sustained demand. Increased costs associated with utilities, fuel, and certain raw materials have been a concern and are expected to be passed on to customers. Notably, Uganda’s annual inflation rate decreased to 2.8% in March, according to the latest data from the Uganda Bureau of Statistics (UBOS).
South Africa’s Economic Struggles Reveal Uneven Recovery
While the first-quarter data suggests improvement across many regions, broader trends from 2025 indicate that Africa’s recovery is uneven. South Africa recorded the lowest average PMI in 2025 at 49.3, a decrease from 50.0 in 2024, and the economy faced six months of negative growth during the year, culminating in December with a PMI of 47.7.
The report from S&P Global noted significant declines in business activity in December, with the contraction felt across sectors at a level not seen since January. A third consecutive month of falling new orders reflected shrinking household spending and weak business demand, alongside a decline in export orders.
According to David Owen, a senior economist at S&P Global Market Intelligence, the South African economy weakened significantly in the fourth quarter, responding negatively to higher prices and mounting economic challenges. In November, inflation fell to 3.5%, prompting the South African Reserve Bank to reduce its benchmark repo rate to 6.75%.
Uganda Expected to Maintain PMI Leadership in 2025
Looking ahead, Uganda is expected to retain its position as the country with the highest PMI in Africa, resting at an average score of 53.7 in 2025, up from 53.3 in 2024. The nation has consistently recorded the highest PMI for at least six months of the past year, with Nigeria trailing closely behind.
Regirisho commented that Uganda’s private sector performance is a testament to its economic resilience, indicating stable employment conditions following ten months of growth, even as backlogs increased due to rising orders. Companies are enhancing purchasing behavior and inventories to meet this escalating demand, suggesting that the momentum will likely be captured in forthcoming official growth statistics.
Continued Risks Amidst Fragile Recovery
Despite positive signs in the first quarter, significant risks remain. A recent report from the World Bank indicates that high-frequency indicators such as the PMI reflect a volatile and uneven recovery landscape across sub-Saharan Africa, influenced by structural challenges and external shocks.
The report elaborates that during the opening months of 2025, private sector activities in Ghana and South Africa faced challenges in gaining traction due to lower production volumes and a lack of export orders. Additionally, Mozambique’s activities were disrupted primarily by civil unrest and protests, demonstrating the complexity of the recovery process across the region.
