Bank of Uganda Bond Rates Explained (Current & Historical)
Bank of Uganda (BOU) treasury bonds are one of the safest and most rewarding ways Ugandans can invest. But to invest wisely, you need to understand one key thing — the bond rate. Here’s a simple explanation of what that means, how it changes, and how it affects your money.
What Are Bank of Uganda Bond Rates?
Treasury bonds are long-term loans you give to the government. In exchange, the government pays you back with interest every six months, then returns your original money at the end.
The bond rate — also called the coupon rate — is the fixed percentage of interest you’ll earn every year based on the bond’s face value.
For example, a 15% bond pays you UGX 150,000 per year for every UGX 1,000,000 you invest.
Current Bank of Uganda Bond Rates (2025)
As of early 2025, here are the approximate annual interest rates:
- 2-Year Bond: 14.75%
- 5-Year Bond: 15.80%
- 10-Year Bond: 16.50%
You can find the most updated figures on:
- The Bank of Uganda auction results page
- Your Level Africa account dashboard, which shows current earnings estimates
How Bond Rates Are Determined
Bond rates are not randomly assigned. They are determined through public auctions held by the Bank of Uganda.
Here’s how it works:
- The government says, “We want to raise X billion shillings.”
- Investors (banks, institutions, and individuals) submit bids.
- The final rate — called the cut-off yield — is the average rate accepted by BOU.
- Everyone who invests at that round earns the coupon rate based on this cut-off.
This is why rates can slightly vary from one auction to another.
Historical Bond Rate Trends in Uganda
Over the past 5–10 years, bond rates have generally stayed within this range:
- 2-Year Bonds: 11%–15%
- 5-Year Bonds: 12%–16%
- 10-Year Bonds: 13%–17%
Rates tend to go up when inflation or government borrowing rises.
What These Rates Mean for You
High bond rates might seem attractive — but they must be looked at in context:
- If inflation is 8% and your bond pays 15%, your real return is about 7%.
- But if inflation rises to 14%, then your real return drops to 1%.
That’s why it’s important to think long-term and choose bonds that beat inflation.
Example: Investing in a Bond with a 15% Rate
Let’s say you invest UGX 1,000,000 in a 2-year treasury bond at 15%:
- You earn UGX 75,000 every 6 months
- That’s UGX 150,000 total per year
- After 2 years, you get UGX 1,000,000 back
Keep in mind, a 15% withholding tax applies on your interest, so your actual annual earnings are UGX 127,500.
Where to Track Bond Rates and Invest
You can follow bond rates on:
- Bank of Uganda Auction Results
- Invest in Bonds on Level Africa (view current bonds, expected returns, and place instant orders)
Frequently Asked Questions
Are bond rates guaranteed?
Yes, once you buy a bond, your rate is fixed for the full term.
Do higher rates mean better investment?
Not always. High rates could mean higher inflation or borrowing needs.
Can I lock in a rate?
Yes. When you invest during a particular auction, the rate you receive is based on the cut-off yield announced by the Bank of Uganda after all bids are submitted. Once your bid is accepted and the bond is issued, your interest rate (coupon rate) is fixed for the entire life of the bond.
Final Thoughts and Next Steps
Understanding bond rates helps you choose the best time and product to invest in. The higher the rate — and the lower the inflation — the more your money grows.
You can start with as little as UGX 100,000. Check the latest bond rates and place your first investment today.