Treasury Bonds vs Fixed Deposits in Uganda: Which Is Better in 2025?

If you have UGX 1 million or more sitting idle, you may be wondering whether to lock it in a fixed deposit or invest it in a government treasury bond. Both are safe and popular — but which one gives you more value in 2025?

What Are Treasury Bonds?

A treasury bond is a way to lend money to the Government of Uganda. In return, the government promises to pay you interest every six months and return your full investment at the end of the agreed period (like 2, 5, or 10 years).

Treasury bonds are issued and managed by the Bank of Uganda. Investors earn regular interest and enjoy strong safety.

Example: You invest UGX 1,000,000 in a 2-year treasury bond with 15 percent annual interest. You get UGX 75,000 every 6 months, and your full UGX 1,000,000 back at the end.

What Are Fixed Deposits?

A fixed deposit is a savings account you open with a commercial bank, where you agree not to touch your money for a set time — usually 3, 6, or 12 months.

The bank pays you a fixed interest amount once, at the end of the period.

Fixed deposit interest rates in Uganda vary between banks and depend on several factors:

Bank: Different banks offer different rates. 4-10.25%
Deposit Amount: Higher amounts may earn better rates.
Tenor: Longer-term deposits (e.g., 3 years) usually earn more.
Negotiation: Rates above UGX 20 million are often negotiable

Important: Fixed deposits are usually locked in. Some banks allow early withdrawal, but often with a reduced interest payout. Always check the bank’s terms.

Example: You deposit UGX 1,000,000 at 9.5 percent for 1 year. You get UGX 95,000 at the end, no interest before that.

Key Differences at a Glance

Returns:

Treasury Bonds: 14–17 percent per year (paid in two instalments)
Fixed Deposits: 8–13 percent per year (paid at end of term)

Access to Funds:

Treasury Bonds: Meant to hold until maturity, but can be sold
Fixed Deposits: Locked for term; early withdrawal reduces earnings

Risk and Safety:

Treasury Bonds: Backed by Government of Uganda
Fixed Deposits: Backed by licensed commercial banks

Minimum Investment:

Treasury Bonds: UGX 100,000
Fixed Deposits: Varies by bank, often UGX 500,000 and above

Tax:

Treasury Bonds: 15 percent withholding tax on interest
Fixed Deposits: 15 percent withholding tax on interest

Real-Life Example (UGX 1,000,000 Investment)

Fixed Deposit (1 year at 9.5 percent):

Total Interest: UGX 95,000 (paid once at the end)
Final Amount: UGX 1,095,000

Treasury Bond (2 years at 15 percent):

Total Interest: UGX 300,000 (UGX 75,000 every 6 months)
Final Amount: UGX 1,300,000

Which Is Right for You?

If You Need Liquidity: Choose fixed deposit — shorter terms, easier access
If You Want Higher Returns: Choose treasury bonds — better long-term growth
If You Prefer Simplicity: Fixed deposit may be easier to understand

How to Get Started with Treasury Bonds

Level Africa makes treasury bond investing easy and accessible.

Create a free Level Africa account
Complete KYC by uploading your ID
Fund your account with Mobile Money or bank
Browse bonds and choose one that fits your goals
Place your order and start earning interest

You only need UGX 100,000 to begin.

Frequently Asked Questions

Can I do both?
Yes. Many people use fixed deposits for short-term savings and treasury bonds for long-term growth.

What if I need my money early?
With treasury bonds, you can sell on the secondary market. With fixed deposits, you may get a penalty.

Do you offer fixed income products on Level Africa?
Yes. In addition to treasury bonds, Level Africa offers fixed income products such as the Utilis Fixed Income Product. These are designed for long-term investors seeking high returns, with annual returns around 14 percent and minimum investment amounts starting at UGX 10,000,000. You can explore and invest in these options directly from your Level Africa account.

Final Thoughts and Next Steps

Both options are solid — but treasury bonds give you higher returns, more frequent payouts, and solid safety. If you’re ready to grow your savings in 2025, take the next step.

Start with just UGX 100,000. Your money will thank you.

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:

Create an account on Level Africa
Upload your National ID or Passport (KYC)
Go to “Treasury Bonds” under Products
Choose a bond that matches your investment goals
Deposit funds into your wallet
Place your order — instantly if marked “Available”
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.