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.