The Municipality of Mbarara is believed to have picked its name from a tall grass locally known as Emburara (Hyperemia ruffa) that covered the whole area. Its real commercial growth begun with the appearance of the Asian trader and by 1950, there were about 15 commercial premises operating in the town. More commercial enterprises were set up in 1950 and 1960. In 1957, it was declared a township authority under the British Administration at Kamukuzi, and elevated to Municipality Status in 1974.
The current economy of Mbarara Municipality is predominantly based on the social services sector, the informal sector activities, trade, and industry. Mbarara is the biggest town in the western part of Uganda and the second transit town between Rwanda and Uganda. Majority of people derive their livelihood from employment income (54.3 percent), business industry (26 percent), farming (7.1 percent), property (1.6 percent) and other incomes (10.9 percent), (Mbarara Municipality Three Year Rolling Development Plan, 2019/10-2011/12).