What Are Government Bonds? Simple Explanation for Ugandans

If you have ever wondered what government bonds are and whether they are worth your attention, this guide is for you. We break it down simply so anyone in Uganda can understand.

Understanding the Basics

A government bond is when you lend money to the government. In return, they agree to pay you interest regularly and return the full amount you lent after a set time.

It is like giving a trusted friend UGX 1,000,000 with the promise that they will pay you UGX 150,000 every year and return your full UGX 1,000,000 after a few years. The difference is, this friend is the government.

Government bonds in Uganda are issued by the Bank of Uganda. When you invest in one, you are helping the government raise money to build roads, schools, hospitals, and more.

Why Government Bonds Matter

Governments borrow money to fund national projects without raising taxes suddenly. Instead of taking a loan from a bank, they borrow directly from people like you.

In return, you earn interest while the country grows. That makes bonds a win for both the government and the investor.

Are Government Bonds Safe?

Government bonds are considered one of the safest investments.

They are backed by the Government of Uganda
You receive a fixed return
Your capital is repaid in full at maturity

The only real risk is inflation. If prices rise faster than your bond earns, your money may lose value over time. Bonds are best for long-term planning.

How You Earn Money from Government Bonds

You earn in two ways:

Interest Payments: You receive interest every six months. If your bond pays 15 percent, that is UGX 150,000 per year for every UGX 1,000,000 you invest.
Maturity Payout: At the end of the bond period (for example, 2 or 5 or 10 years), you get your original money back.

Example: If you invest UGX 1,000,000 in a 5-year bond at 15 percent:

You earn UGX 75,000 every 6 months
After 5 years, you get your UGX 1,000,000 back

How to Buy Government Bonds in Uganda

You do not need millions or a broker. Here is how to get started through Level Africa:

Create a free account on Level Africa
Upload your National ID or passport
Fund your account using Mobile Money or a bank
Go to “Products > Treasury Bonds”
Choose a bond that fits your plan
Place your order and start earning interest

You can start with as little as UGX 100,000.

Common Misunderstandings

“Are bonds only for rich people?”
No. In Uganda, you can invest in government bonds with as little as UGX 100,000.

“Can I lose my money?”
It is very unlikely. These are backed by the government. Just make sure to invest through licensed platforms.

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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.