Treasury Bills vs Bonds in Uganda – Which Is Right for You?
Government securities are among the safest investments in Uganda, but many people get confused between treasury bills and treasury bonds. While both are issued by the Government of Uganda through the Bank of Uganda, they serve different purposes and suit different types of investors. This guide breaks down the key differences so you can choose what’s right for you.
What Are Treasury Bills?
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Short-term securities issued for 91 days, 182 days, or 364 days.
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Bought at a discounted price and redeemed at face value at maturity.
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Example: Buy a UGX 1,000,000 bill at UGX 900,000 → Get UGX 1,000,000 at maturity → Profit UGX 100,000 (before tax).
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Best for short-term savers or people who want to park funds safely for a few months.
What Are Treasury Bonds?
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Long-term securities issued for 2, 3, 5, 10, 15, or even 20+ years.
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Pay semi-annual coupon interest (every six months) plus full principal at maturity.
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Example: Buy a UGX 1,000,000 bond at 15% coupon → Earn UGX 75,000 every six months, plus UGX 1,000,000 at the end.
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Best for long-term investors who want predictable income over time.
Treasury Bills vs Bonds – Key Differences
| Feature | Treasury Bills | Treasury Bonds |
|---|---|---|
| Tenor | 91, 182, 364 days (short-term) | 2–20+ years (long-term) |
| Returns | Discounted price → Face value at maturity | Semi-annual coupon payments + principal |
| Liquidity | High – matures quickly | Lower – funds locked for years |
| Best For | Short-term savers, emergency funds, school fees | Long-term wealth building, retirement, passive income |
| Risk | Very low (government-backed) | Very low (government-backed) |
| Minimum Investment | UGX 100,000 (bills) | UGX 100,000 (bonds, via platforms like Level Africa) |
Which Should You Choose?
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Choose Treasury Bills if:
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You want to invest for 3–12 months.
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You need your money back quickly.
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You want to test government securities with a small amount.
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Choose Treasury Bonds if:
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You’re investing for the long term (2+ years).
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You want regular cash flow from coupon payments.
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You’re building wealth for retirement or future projects.
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Taxes on Treasury Bills and Bonds
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Treasury Bills: Profit is taxed at 20% withholding tax, deducted automatically.
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Treasury Bonds: Coupon interest is also subject to 20% withholding tax.
Final Thoughts
Both treasury bills and bonds are safe investments backed by the Government of Uganda. The right choice depends on your goals: bills for short-term growth, bonds for long-term wealth building.
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FAQs
1. Are treasury bills or bonds better in Uganda?
Neither is “better” — it depends on your goals. Bills are short-term, bonds are long-term.
2. Can I invest in both treasury bills and bonds?
Yes. Many investors use bills for short-term goals and bonds for long-term wealth.
3. What is safer — treasury bills or bonds?
Both are government-backed and very safe.
4. Which pays more — treasury bills or bonds?
Bonds usually pay higher yields, but your money is locked for longer.
5. What is the minimum to invest in government securities in Uganda?
UGX 100,000, whether in bills or bonds.