How Treasury Bills Work in Uganda – 91, 182, and 364-Day Options
Treasury bills (T-bills) are one of the most popular short-term investments in Uganda. They are safe, predictable, and issued directly by the Government of Uganda through the Bank of Uganda. In this guide, we explain exactly how treasury bills work and the differences between the 91-day, 182-day, and 364-day options.
Understanding How Treasury Bills Work
Treasury bills are short-term government securities. When you invest in one, you are lending money to the government for a set period. In return, the government promises to pay you back more than you invested.
Unlike treasury bonds (which pay interest every six months), treasury bills work on a discount system:
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You buy a treasury bill at less than its face value.
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At maturity, you receive the full face value.
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The difference is your profit (your return).
Example:
You buy a 364-day treasury bill with a face value of UGX 1,000,000 at UGX 870,000.
At maturity, you receive UGX 1,000,000.
Your profit is UGX 130,000 before tax.
The 91-Day Treasury Bill (3 Months)
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Tenor: 3 months.
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Best for: Investors who want to park money short-term, e.g., for school fees or business cash flow.
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Returns: Typically the lowest yield of the three, but still higher than a savings account.
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Liquidity: Very high, since you get your money back quickly.
The 182-Day Treasury Bill (6 Months)
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Tenor: 6 months.
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Best for: Investors who can wait half a year and want better returns than the 91-day option.
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Returns: Usually higher than 91-day bills, with moderate annual yields.
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Liquidity: Medium — your money is tied up for half a year.
The 364-Day Treasury Bill (1 Year)
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Tenor: 1 year.
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Best for: Investors comfortable locking funds for a full year.
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Returns: Typically the highest yields of all treasury bills, sometimes above 15% effective annual rate.
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Liquidity: Lower than the 91 or 182-day bills, but higher profit potential.
How Auctions Decide Treasury Bill Rates
The Bank of Uganda sells treasury bills through auctions held every two weeks.
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Competitive Bids: Submitted by Primary Dealer banks (like Stanbic, Standard Chartered, ABSA, Centenary, Equity). They specify the rate they want.
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Non-Competitive Bids: Available to individuals and institutions through commercial banks. These are automatically accepted at the auction’s cut-off price.
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Withholding Tax on Treasury Bills in Uganda
All profits from treasury bills are subject to 20% withholding tax. The tax is automatically deducted before you receive your returns.
Example:
If your profit is UGX 100,000, you’ll receive UGX 80,000 after tax.
Treasury Bills vs Treasury Bonds
| Feature | Treasury Bills | Treasury Bonds |
|---|---|---|
| Tenor | Short-term (91, 182, 364 days) | Long-term (2–20+ years) |
| Returns | Discount → Face value at maturity | Regular coupon interest + principal at maturity |
| Best For | Short-term savers | Long-term investors |
| Risk | Very low | Very low |
Final Thoughts
Treasury bills are a simple, safe, and short-term way to invest your money in Uganda. Whether you choose the 91-day, 182-day, or 364-day option, the main advantage is predictable returns backed by the Government of Uganda.
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FAQs
1. What is the minimum amount to invest in treasury bills in Uganda?
UGX 100,000, through non-competitive bids at commercial banks.
2. Which treasury bill option has the highest return?
The 364-day bill typically offers the highest yield.
3. How often are treasury bill auctions held in Uganda?
Every two weeks, according to the Bank of Uganda auction calendar.
4. Do treasury bills pay monthly interest?
No. They are bought at a discount and redeemed at full value.
5. Which is better — 91-day or 364-day treasury bills?
It depends on your goal. The 91-day option is more liquid, while the 364-day option usually pays more.