A government bond is an investment that allows you to lend money to the government and earn interest in return.
Instead of borrowing only from banks and other institutions, governments can raise money from investors by issuing securities.
In Uganda, government securities are issued by the Government of Uganda, with the Bank of Uganda conducting government securities auctions.
For investors, government bonds can provide regular income, longer-term investment opportunities and exposure to government-backed securities.
Here is how they work.
How Does a Government Bond Work?
The easiest way to understand a government bond is to think of it as a loan where you are the lender.
When you borrow from a bank:
The bank gives you money → You pay the bank interest → You eventually repay the loan.
With a government bond:
You invest money → The government pays you interest → The bond eventually matures.
Each bond has specific terms that determine how the investment works.
These include its:
- Coupon rate
- Maturity date
- Face value
- Interest payment schedule
If the bond is bought or sold on the secondary market, its price and yield also become important.
This means two investors can own the same Treasury Bond but achieve different investment yields depending on the price at which each investor bought it.
Why Does the Government Issue Bonds?
Governments need financing to meet various expenditure and financing requirements.
Government securities provide a structured way for governments to borrow money from investors.
Instead of simply depositing money into a government account, investors purchase a security with defined terms, including when it matures and how returns are paid.
In Uganda, the two main forms of government securities investors commonly encounter are:
Treasury Bills
and
Treasury Bonds
The major difference between them is how long they run and how investors earn their returns.
What Types of Government Securities Are Available in Uganda?
Treasury Bills
Treasury Bills are short-term government securities.
They are commonly issued for:
- 91 days
- 182 days
- 364 days
Treasury Bills generally do not make regular interest payments.
Instead, they are bought at a discount to their face value and redeemed at face value when they mature.
Treasury Bonds
Treasury Bonds are longer-term government securities.
Unlike Treasury Bills, Treasury Bonds generally make scheduled coupon payments every six months.
They also have longer maturity periods.
For investors looking specifically at longer-term government securities, our guide to Treasury Bonds in Uganda explains how they work, their returns and the factors to consider before investing.
Treasury Bonds vs Treasury Bills in Uganda
Both allow investors to lend money to the Government of Uganda, but they work differently.
| Treasury Bonds | Treasury Bills | |
|---|---|---|
| Issuer | Government of Uganda | Government of Uganda |
| Investment Horizon | Longer term | Shorter term |
| Return Structure | Coupon payments | Bought at a discount |
| Regular Interest | Generally every six months | No regular coupon payments |
| Maturity | Longer-term | 91, 182 or 364 days |
| Investor Use | Longer-term investing and income | Shorter-term investing |
The right one therefore depends partly on how long you want to invest and how you want your returns to be generated.
How Do Government Bonds Make Money?
Treasury Bond investors primarily earn through coupon payments.
Coupon Payments
A Treasury Bond has a coupon rate that determines the scheduled interest payments on its face value.
Suppose you hold:
UGX 10,000,000 face value
in a Treasury Bond carrying a:
15% annual coupon
The annual coupon would be:
UGX 1,500,000 before applicable taxes
Because Uganda Treasury Bonds generally pay coupons every six months, this would typically mean:
UGX 750,000 every six months before applicable taxes.
The coupon itself, however, does not tell you everything about the return you can expect from a bond.
That is where yield becomes important.
Government Bond Coupon Rate vs Yield
When people ask about government bond interest rates, they may be referring to either the coupon rate or the yield.
They are not the same thing.
Coupon Rate
The coupon rate determines the scheduled interest payments based on the bond’s face value.
If a UGX 10 million face-value bond has a 15% coupon, its annual coupon payments total UGX 1.5 million before applicable taxes.
Yield
Yield considers the return relative to factors including the price you pay for the bond and its expected cash flows.
An existing bond with a 15% coupon could therefore be available at a price that results in a yield higher or lower than 15%.
This becomes particularly important when buying Treasury Bonds on the secondary market.
You can see the latest figures and understand the difference in more detail on our Treasury Bond Rates in Uganda resource.
Do Government Bonds Pay Interest Every Month?
No.
Uganda Treasury Bonds generally pay coupon interest every six months rather than monthly.
Using the previous example, a UGX 10 million face-value Treasury Bond with a 15% annual coupon would generally produce:
UGX 750,000 every six months before applicable taxes.
The actual payment dates depend on the particular Treasury Bond.
This matters if you are investing in Treasury Bonds partly to generate income because the payments will not arrive every month.
Are Government Bonds Safe?
Government bonds are generally considered lower-risk investments compared with many market-based investments because they are government securities.
But lower risk does not mean there are no risks or considerations.
Market Risk
If you sell a Treasury Bond before maturity, its market price may be different from the price at which you bought it.
Interest Rate Risk
Changes in prevailing market interest rates can affect the prices and yields of existing bonds.
Inflation Risk
Inflation can reduce the purchasing power of the income generated by your investment.
Liquidity
Treasury Bonds can be bought and sold on the secondary market, but the price available when you want to sell depends on prevailing market conditions.
The useful question therefore isn’t simply:
“Are government bonds safe?”
It is also:
“Does this bond fit when I will need my money and what I want the investment to achieve?”
How Long Do Government Bonds Last?
Treasury Bonds are longer-term securities, but not every bond has the same maturity.
When considering a bond, look at its actual maturity date rather than only the original tenor.
This is particularly important when buying an existing Treasury Bond on the secondary market.
For example, a bond originally issued with a long tenor may already have been outstanding for several years by the time you buy it.
What matters to you is how much time remains until its maturity.
Can You Lose Money on a Government Bond?
The value of a Treasury Bond can change.
This becomes particularly important when an investor wants to sell before maturity.
Suppose market conditions change after you buy your bond.
The price another investor is willing to pay for it may be higher or lower than the price you originally paid.
Selling before maturity can therefore affect your return.
This is why investors should distinguish between holding a bond according to its scheduled terms and selling the bond on the secondary market before maturity.
Can You Sell a Government Bond Before It Matures?
es.
Treasury Bonds can be traded on the secondary market.
You therefore don’t necessarily have to hold a Treasury Bond until its maturity date.
However, selling a Treasury Bond is different from withdrawing money from a savings account.
The amount you receive depends on the market price available when you sell.
Your expected investment period should therefore be considered before choosing a Treasury Bond.
Do You Have to Wait for a Government Bond Auction?
No.
Bank of Uganda conducts government securities auctions through which new Treasury Bonds can be issued or existing bonds reopened.
But after issuance, Treasury Bonds can also be bought and sold through the secondary market.
This means you may be able to invest in an existing Treasury Bond without waiting for the next Bank of Uganda auction.
If you want to understand how the auction itself works, read our guide to Bank of Uganda Treasury Bond Auctions.
For upcoming auction dates, follow the Bank of Uganda Treasury Bond Auction Calendar 2026/27
How Much Money Do You Need to Invest in Government Bonds?
Treasury Bond opportunities available through Level Africa can start from UGX 100,000, subject to the minimum investment and terms of the particular opportunity.
The actual amount required therefore depends on the Treasury Bond available when you want to invest.
Before investing, check the bond’s:
- Minimum investment
- Price
- Yield
- Coupon rate
- Maturity date
- Other applicable terms
This allows you to evaluate the actual opportunity rather than assuming every Treasury Bond has the same minimum.
How to Buy Government Bonds in Uganda
Treasury Bonds are available through Level Africa.
The process can be completed in four steps.
1. Create & Verify
Create your Level account and complete the required identity verification.
2. Fund Wallet
Add money to your Level wallet using the available funding options.
3. Choose a Treasury Bond
Compare available Treasury Bonds based on their yield, coupon rate, price, maturity and other terms.
4. Invest & Track
Complete your investment and monitor it through your Level dashboard.
For the complete walkthrough, read How to Buy Treasury Bonds in Uganda: A Step-by-Step Guide.
Who Might Consider Government Bonds?
Government bonds can be relevant for different investment goals.
Investors Looking for Regular Income
Treasury Bonds generally provide coupon payments every six months.
Investors Looking for Government Securities
Treasury Bonds provide exposure to securities issued by the Government of Uganda.
Longer-Term Investors
Different maturities allow investors to consider bonds based on how long they want their money invested.
Investors Building a Diversified Portfolio
Government securities can form one part of a broader portfolio alongside other investment products.
The important consideration is whether the particular bond’s return, maturity, liquidity and risk fit what you are trying to achieve.
Government Bonds vs Keeping Money in a Savings Account
A government bond and a savings account serve different purposes.
A savings account generally prioritises access to your money while paying the applicable bank interest rate.
A Treasury Bond is an investment security with a defined coupon, maturity and market value.
Treasury Bonds can provide investment income, but your capital isn’t accessed in exactly the same way as money sitting in a savings account.
If you sell a Treasury Bond before maturity, its prevailing market price matters.
The better fit therefore depends largely on:
What is this money for?
and
When will I need it?
Explore Government Bonds on Level Africa
If Treasury Bonds fit what you are looking for, you can review available opportunities directly on Level Africa.
Rather than looking only at the coupon rate, compare the yield, price, maturity date, minimum investment and investment terms of each available bond.
This helps you understand what you are actually investing in and how it fits your goal.
Frequently Asked Questions
What is a government bond in simple terms?
A government bond allows you to lend money to a government for a defined period under specified terms. Treasury Bonds generally provide scheduled interest payments during the life of the investment.
What are government bonds called in Uganda?
Uganda’s government securities include Treasury Bonds and Treasury Bills.
Who issues government bonds in Uganda?
Treasury Bonds are securities issued by the Government of Uganda, with the Bank of Uganda conducting government securities auctions.
How do government bonds make money?
Treasury Bonds primarily generate income through scheduled coupon payments. Your overall return can also be affected by the price at which you buy or sell the bond.
How often do government bonds pay interest in Uganda?
Uganda Treasury Bond coupons are generally paid every six months.
Are government bonds risk-free?
Government securities are generally considered lower risk than many market-based investments, but investors should still consider factors such as inflation, interest rates, liquidity and changes in market prices.
Can I sell a government bond before maturity?
Yes. Treasury Bonds can be traded on the secondary market, although the price available when you sell depends on prevailing market conditions.
What is the difference between a government bond and a Treasury Bond?
“Government bond” is a broad description of a bond issued by a government. In Uganda, Treasury Bonds are government securities used for longer-term borrowing.
How much do I need to invest?
Treasury Bond opportunities available through Level Africa start from UGX 100,000, subject to the terms of the particular opportunity.
Can I buy government bonds online in Uganda?
Eligible investors can access available Treasury Bond opportunities digitally through Level Africa, subject to applicable verification and investment requirements.