Bank Of Uganda Treasury Bonds Explained – What Investors Should Know (2025)

If you’re curious about how government bonds in Uganda work, you’re not alone. Every month, the Bank of Uganda issues treasury bonds — offering Ugandans a safe and structured way to earn interest on their money. But how does it all work behind the scenes?

This guide breaks down key points from the official General Prospectus for Government of Uganda Bond Issuances into simple, practical insights — perfect for beginners and growing investors alike.

What Are Treasury Bonds?

Treasury bonds are loans you give to the government. In return, the government pays you interest every 6 months and gives back your full amount at the end of the bond’s term.

• Bonds come in 2, 3, 5, 10, 15, and 20-year durations

• Coupon rate: The fixed interest rate you earn

• Maturity date: When your original investment is returned

How the Auction System Works

Uganda holds a bond auction every 28 days. Here’s how it goes:

1. The Bank of Uganda announces the auction about a week before

2. Investors submit bids through their Central Depository System (CDS) account

3. You can choose to:

   • Set your own rate (competitive bid – UGX 200M+)

   • Accept market yield (non-competitive – UGX 100K minimum)

4. All successful bids receive the same yield, known as the cut-off yield

Settlement happens the next day after the auction (T+1).

How Interest Is Paid

• Bonds pay interest twice a year — every 182 days

• Payments go to your registered bank account

• If a payment date falls on a public holiday, it’s moved to the next business day

Example:
If you invest in a 5-year bond at 14.125%, you’ll receive UGX 70,625 every 6 months for every UGX 1 million you invest.

Who Can Invest?

• Ugandan individuals and institutions
• Foreign investors (resident and non-resident)
• Anyone with a CDS account at the Bank of Uganda

You don’t need millions. You can start investing with just UGX 100,000.

Taxes on Bonds (Withholding Tax)

Interest earned from bonds is subject to withholding tax:

• Typically 20% for shorter-term bonds (e.g. 2–5 years)

• Often 10% for longer-term bonds (e.g. 10–20 years)

• Tax is deducted before you receive your interest

Can You Sell Your Bond Early?

Yes. The prospectus confirms that bonds are:

• Transferable and negotiable

• Can be sold before maturity via a process called rediscounting

• Can be used as collateral for loans

This means your investment isn’t locked in forever — you have flexibility.

What Happens If You Miss a Payment Deadline?

If you fail to settle after winning an auction bid, you:

• Are considered a defaulter

• May be suspended from future bond auctions

Always make sure your funds are ready before bidding.

Key Terms to Know

How to Start Investing with Level Africa

Level Africa gives you direct access to treasury bonds — no paperwork, no queues.

Steps to get started:

1. Create an account on Level Africa

2. Complete KYC with your ID or passport

3. Go to Treasury Bonds under Products

4. Choose bonds listed (including reopened 3Y or 20Y bonds)

5. Fund your Level wallet

6. Buy bonds — instantly, if marked “Available”

7. Track interest and returns from your dashboard

Final Thoughts

Understanding treasury bonds becomes much easier when you see what’s actually in the official prospectus. The rules are clear, the process is structured, and the opportunities are real.

You can start small, earn consistent interest, and build wealth with confidence.

Start Now – Create an Account on Level Africa

Join our community of like minded investors like yourself today Building Wealth With Level Africa.

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Frequently Asked Questions About Treasury Bonds in Uganda

What are government bonds?

Government bonds are a way to lend money to the Government of Uganda. In return, the government pays you a fixed interest rate every 6 months and gives back your full investment at the end of the bond’s term.

How do treasury bonds work in Uganda?

You buy a bond (e.g. 3, 5, or 10 years), the government pays you interest every 6 months, and you get your full capital back when the bond matures. All bonds are issued and regulated by the Bank of Uganda.

What is the minimum amount to invest in government bonds?

You can start investing with UGX 100,000 using a non-competitive bid. No broker is needed when using platforms like Level Africa.

How can I buy government bonds in Uganda?

You need a Central Depository System (CDS) account or a digital investment platform like Level Africa.
Steps:

1. Create an account on Level Africa
2. Upload your National ID or Passport (KYC)
3. Go to “Treasury Bonds” under Products
4. Choose a bond that matches your investment goals
5. Deposit funds into your wallet
6. Place your order — instantly if marked “Available”
7. Track your bond and earnings from your dashboard

What are the current treasury bond interest rates in Uganda (2025)?

Rates vary by bond type and auction results. For example:

• 2-Year bond: around 15.75%
• 10-Year bond: around 16.25%
• 20-Year bond: up to 18.50%
  All rates are set during each auction by the Bank of Uganda.

Are treasury bonds safe in 2025?

Yes. Treasury bonds are backed by the Government of Uganda and are considered among the safest investments, especially for long-term or retirement goals.

Do government bonds pay interest?

Yes. Interest is called a coupon and is paid out every 6 months. You receive it directly to your wallet or bank account.

Can I sell a bond before it matures?

Yes, bonds are transferable and can be rediscounted if you need to exit early, although the resale price depends on current market rates.

How do interest rates affect bonds?

If new bond rates go up, the value of existing bonds on the market may go down (and vice versa). However, if you hold your bond until maturity, you still get your full investment and all promised interest.

What’s the difference between treasury bonds and treasury bills?

• Treasury bonds: Long-term (2–25 years), pay interest every 6 months
• Treasury bills: Short-term (91–364 days), sold at a discount and paid back in full at maturity

Can individuals buy Bank of Uganda treasury bonds?

Yes. Both individuals and institutions can invest. Many Ugandans now use Level Africa to access bonds directly with no paperwork.

How often are treasury bonds auctioned in Uganda?

Typically, every 28 days. The auction calendar is published annually by the Bank of Uganda, and Level Africa notifies you ahead of each sale.

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