Ten Extra Years Started Paying Again, and NSSF Declared 22.53%
- 16.25%
- Paid on 25-year debt
- 22.53%
- NSSF rate declared
- Ugx 350bn
- Bills on sale Wednesday
- 5.10%
- US 10-year, 19-year high
- 1Why we are reversing “stop at ten years”, and the number that changed it.
- 2The twenty-five-year was the easiest bond to get, not the hardest: 81% of bids accepted against 7% on the five-year.
- 3What Wednesday's bill auction turns on, and the three numbers landing the same morning.
- 4NSSF's 22.53%, and the two-fifths of it that came from share gains.
The government took Ugx 1,036 billion of twenty-five-year money against an offer of Ugx 350 billion, and paid 16.25% for it. At the same auction it turned away most of what was bid for its shorter bonds, taking 16% of the two-year offer and 10% of the five-year.
Two weeks ago the twenty-year paid exactly what the ten-year paid and lending longer bought nothing; the twenty-five-year now nets 14.46% against 13.70% at twenty years. Two days later NSSF declared a record 22.53% to its members. Both numbers now sit above everything else a Ugandan saver can earn, and both need reading carefully before they are acted on. This week brings Treasury bills on Wednesday 30 September, alongside Uganda’s September inflation figure and America’s own.
Weekly Markets Overview: 28 September – 2 October 2026
Last week in a nutshell
| Bond | Rate | Offered | Bids | Accepted | Share of offer taken |
|---|---|---|---|---|---|
| 2-year | 12.00% | 250bn | 305bn | 39bn | 16% |
| 5-year | 13.74% | 350bn | 535bn | 36bn | 10% |
| 15-year (new) | 15.25% | 450bn | 488bn | 89bn | 20% |
| 25-year | 16.25% | 350bn | 1,273bn | 1,036bn | 296% |
| Total | — | 1,400bn | 2,600bn | 1,201bn | 86% |
The government raised 86% of what it set out to raise. Only about Ugx 75 billion came from the 2-year and 5-year bonds combined. When a borrower is short of money it has three choices, not two: pay more, raise less, or change which loan it takes. Uganda did the first and the third.
What is driving it?
- The budget is badly behind. In August the government collected Ugx 2,896 billion against a target of Ugx 3,299 billion, Ugx 403 billion short, and spent Ugx 3,317 billion against a plan of Ugx 3,004 billion, Ugx 313 billion over. That left a shortfall of Ugx 709 billion against a planned Ugx 258 billion, nearly three times the plan. VAT alone came in Ugx 136 billion short. A government that far behind does not walk away from people offering it cash.
- Government also borrows ahead of time. Five months of the Ministry’s own reports show it. June brought in more revenue than expected yet the government still took Ugx 1,681 billion of new borrowing. In July it borrowed nothing net, −Ugx 93 billion, against a shortfall of Ugx 2,906 billion. July was paid for with June’s money. This suggests Wednesday’s borrowing was partly money raised early for spending already planned, not simply an emergency cash grab.
- Banks had less money available that week. The amount banks must keep at the central bank rose from 11% to 13.5%, while the auction itself moved about Ugx 1.2 trillion from banks to government. That made money tighter in the banking system.
- There was strong demand for the long-term bond. Investors, especially pension funds, offered Ugx 1.27 trillion for the 25-year bond against just Ugx 350 billion advertised. Government accepted much of that money, even at 16.25%, because investors were willing to lend for the long term.
Five months of the Ministry’s own reports
| Month | Revenue vs plan | Spending vs plan | Shortfall: planned → actual | New borrowing |
|---|---|---|---|---|
| Apr 2026 | −384bn (88%) | +229bn | 452bn → 265bn | 988bn |
| May 2026 | −567bn (83%) | −291bn | 2,147bn → 2,071bn | 685bn |
| Jun 2026 | +801bn (116%) | −407bn | 691bn deficit → 517bn surplus | 1,681bn |
| Jul 2026 | −247bn (92%) | +149bn | 2,728bn → 2,906bn | −93bn |
| Aug 2026 | −403bn (88%) | +314bn | 258bn → 709bn | 600bn |
What happened internationally
Oil prices above US$100 a barrel pushed up costs for American businesses. By Wednesday, data showed business costs rising at their fastest pace in four years, and by Friday, Americans were expecting higher inflation. That increased expectations that the US Federal Reserve could raise interest rates again on 28 October. US government bond yields also jumped, with the 10-year reaching 5.10%, its highest since 2007, while the 30-year reached about 5.5%, its highest since 2004.
| The Federal Reserve | |
|---|---|
| The American rate now | 3.75% – 4.00%, after a quarter-point rise on 16 September — the first increase since 2023, on a unanimous vote. |
| What the Chair said | Kevin Warsh: inflation “is too high and has been too high for too long”. |
| What its officials expect | 16 of 19 expect at least one more rise before the end of 2026. |
| Next decision | Wednesday 28 October. Market odds of a rise: between about 58% and 71%, depending on the source, from roughly a coin toss a week earlier. |
On Wednesday 23rd, S&P Global’s flash survey of American businesses showed strong economic activity, but also rising costs, supply delays and higher fuel and transport expenses. The same day, a Federal Reserve official said inflation was still too high and that more policy action might be needed. By Friday, Americans expected 4.6% inflation over the next year, up from 4.0%. US five-year government debt also reached 5.033%, its highest since 2006.
For Uganda, the pressure continues. When US investments offer around 5% with relatively low risk, investors have less reason to put money into riskier markets like Uganda. That puts pressure on the shilling and Uganda’s borrowing costs. It also helps explain the pressure on gold prices, which matters because gold makes up a large share of Uganda’s exports.
Why the two oil prices moved in opposite directions
Brent rose 0.4% to US$104.32, while American crude fell 7.9% to US$92.41. For Uganda, Brent is the number that matters, because our fuel prices are linked more closely to Brent. American crude fell mainly because there was hope that the US-Iran conflict could ease, including a possible reopening of the Strait of Hormuz. But Brent stayed high because actual oil supply remained under pressure. Saudi Arabia faced missile attacks near an oil export port, while some European refineries were told they would receive no Saudi oil in October. So the drop in American oil prices does not necessarily mean cheaper fuel for Uganda.
Gold and coffee — the two prices that decide what Uganda earns
Gold fell about 2% to around US$4,285. It is now about 23% below its January high of US$5,590, continuing a longer decline. Still, central banks are buying gold heavily, with purchases up more than 60% from a year earlier.
Coffee is facing a tougher problem. London robusta closed at US$3,362 a tonne, down 19.5% over the year and only about 7% above its twelve-month low. Arabica, the price usually quoted, was 279 US cents a pound and down 26%. The reason is supply: the International Coffee Organization puts world production up 4.4% to 183.6 million bags and, the line that matters, “a surplus of 3.0 million bags after four consecutive years of shortage.” The Americans expect 2026/27 bigger still, naming Uganda among the record producers. It has already reached the farm: the Agriculture Minister put Ugandan robusta at Ugx 11,500–12,000 a kilo in early September against Ugx 13,500–14,000 a year earlier, and drought in Greater Masaka, Kyotera, Sembabule and Luwero has cut the crop too. A lower price and a smaller harvest at the same time.
Treasury bills, Wednesday 30 September 2026
Can the government still buy short money at 11.000% when banks are genuinely short of cash? That is the question going into Wednesday.
Bank of Uganda is offering Ugx 350 billion of bills. Bids close at 10.00am Wednesday and settlement is Thursday 1 October. This is the first bill sale since the new reserve requirement began, and since Wednesday’s bond settlement moved Ugx 1.2 trillion from the banks to the Treasury in one morning.
| Bill | 2 Sep auction | Our estimate | Our range |
|---|---|---|---|
| 91-day | 10.112% | 10.450% | 10.100 – 10.850% |
| 182-day | 10.250% | 10.700% | 10.300 – 11.150% |
| 364-day | 11.001% | 11.450% | 11.000 – 11.900% |
The reasoning behind this
The reserve requirement is live rather than announced, and Thursday 24 September moved Ugx 1.2 trillion out of the banking system.
In August it collected Ugx 403 billion less than planned, leaving a funding gap almost three times bigger than expected.
A 25-year clearing at 16.25% suggests the rest of the curve was priced too low.
It has just raised Ugx 1.2 trillion, the overnight rate banks charge each other was still a comfortable 9.42% on 21 September, and it has refused expensive short money at every auction since August.
Three numbers land on the same morning
Wednesday 30 September carries the bill auction, Uganda’s September inflation figure and America’s latest inflation reading, all within nine hours.
Ugandan inflation has risen three months running: 3.7%, 4.0%, 4.1%. We expect a fourth rise, to about 4.5%, because the shilling’s fall and fuel above US$100 a barrel are still working through to shop prices. Fuel and utilities were already rising at 14.9% a year in July.
Bids close before either inflation figure is published. If you are bidding, you are bidding blind on both.
Where the curve is sitting
This is the table that matters, not the auction. It shows what each government security keeps after tax, at the market price as at the end of the previous week. Withholding tax follows the individual bond, not the number of years in its name, which is why the 5-year is taxed at 10% while the 2-year is taxed at 20%.
| Instrument | Last auctioned | Rate, 25 Sep | Tax | After tax | Real return |
|---|---|---|---|---|---|
| 364-day bill | 2 Sep | 10.81% | 20% | 8.64% | 2.74% |
| 2-year bond | 23 Sep | 11.91% | 20% | 9.53% | 3.57% |
| 3-year bond | 9 Sep | 12.05% | 20% | 9.64% | 3.68% |
| 5-year bond | 23 Sep | 15.19% | 10% | 13.67% | 7.49% |
| 10-year bond | 9 Sep | 15.20% | 10% | 13.68% | 7.50% |
| 15-year bond (new) | 23 Sep | 15.21% | 10% | 13.69% | 7.51% |
| 20-year bond | 9 Sep | 15.23% | 10% | 13.70% | 7.52% |
| 25-year bond | 23 Sep | 16.06% | 10% | 14.46% | 8.23% |
Reversing “stop at ten years”
Two weeks ago the 20-year paid exactly what the 10-year paid and extending was uncompensated. That is no longer true. The 25-year nets 14.460% against 13.680% at 10 years, 13.690% at 15 years and 13.700% at 20 years.
About 81% of bids were accepted, compared with 6% for the 5-year and 13% for the 2-year. So the main challenge lately has been getting your full order accepted. Last week, the 25-year offered both a high return and a better chance of being fully filled. It was also priced close to its actual value: it cleared at 100.591, almost at par, with a 16.000% coupon. By comparison, the 2-year and 5-year were priced well above par. Buying near 100 means less of your return comes from simply getting your own capital back at maturity, making the 25-year structure cleaner for investors.
The 20-year re-opens that day carrying a stale 15.000% from before the repricing. Either it moves up toward the 25-year, in which case it is the better entry, or it does not, in which case the 25-year remains the only place on the curve paying for duration. Either outcome is worth waiting a week to see.
The 2-year bond and all Treasury bills are taxed at 20%; the 5-year and everything longer at 10%. That difference is worth more than several extra years of maturity. Confirm the band on the specific bond with your dealer: it follows the bond, not the number of years in its name.
Last Wednesday proved it rather than asserted it: the large banks were filled on 6% of what they wanted on the 5-year, for instance, while every non-competitive bid on all four bonds was filled in full at the same price.
A 3-year, a 10-year and a 20-year return that Wednesday, priced after this week’s inflation figures and with the 16.25% visible to everyone. If the whole curve was priced too low, that is where the middle of it corrects. But government has just raised a lot of money, so it may not be willing to pay higher rates.
The Central Bank Rate has been 9.75% for over a year and told you nothing about this month. Two reserve requirement rises in four months tell you a great deal.
A 33% rise on just Ugx 51,500 of trading does not tell you much about the company’s true value, and last week it was followed by a profit warning.
Prepared by Glen Busobozi and Lutaaya Emmanuel Victor
What happened locally
The August Performance of the Economy report
| What it covers | Latest | What it says |
|---|---|---|
| Inflation | 4.1% in August | Food-led. Energy, fuel and utilities actually eased, to 14.3% from 14.9%. |
| The shilling | Ugx 3,730 average | Down 0.7% on July, on dollar demand from energy and manufacturing that exporter inflows and remittances could not offset. That is an August average. The market has moved well past it, to 3,925/3,935 by 21 September. |
| Cost of a bank loan | 17.32% in July | Up from 16.93% in June, though still below a year ago. This is the line to watch now that banks must park more of their deposits at the central bank. |
| Private sector credit | Ugx 28,089bn | Growing 18.1% a year. Lending to businesses and households is still expanding briskly. |
| The trade gap | US$210m in July | Against US$11m a year earlier: imports rose 25.4%, exports 10.1%. Gold earnings up 35% to US$788m; coffee down 18.2% to US$205m. A gap that wide is a standing monthly demand for dollars. It explains the shilling better than any market commentary. |
Two things here matter to ordinary households. Uganda is buying far more from abroad than it is selling, creating a bigger demand for dollars and putting pressure on the shilling. Gold is supporting exports, but coffee exports are weakening. Borrowing is also getting more expensive: the average bank lending rate reached 17.32% in July, before the September increase in banks’ reserve requirement. With banks now having less money available to lend, loan rates could rise further in the coming months.
NSSF’s 22.53%: don’t treat it as the new normal. NSSF declared a record 22.53% return for the year ended June 2026, up from 13.5% the previous year, adding Ugx 5.44 trillion to members’ accounts. Assets reached Ugx 32 trillion and income Ugx 6.51 trillion, of which about Ugx 3.49 trillion was interest on bonds, Ugx 369 billion was dividends, and Ugx 2.62 trillion, roughly 40% of the income earned, came from gains in East African shares. Those are real gains, but they rise and fall with markets, so this does not mean NSSF will pay 22.53% every year. Over the past 15 years NSSF’s return has averaged about 12.4%, with previous annual returns ranging from 9.65% to 15%.
Why this matters for savers: Uganda’s unit trusts have also grown strongly, reaching about Ugx 6.02 trillion by March 2026, with many earning around 11–13%. NSSF’s record return now creates a bigger gap that fund managers will have to explain to savers. Importantly, NSSF’s own deputy managing director advised members to spread their money across different investments rather than relying on one product.
NIC Holdings issued a profit warning. On 23 September, NIC Holdings warned investors that its profits are expected to be weaker than previously expected. Its 2025 accounts had already shown a Ugx 1.52 billion loss, compared with a Ugx 480 million profit in 2024, while its life insurance business had a capital shortfall. What makes the warning more important is what happened to the share price before it. NIC rose from Ugx 10.20 to Ugx 16.00 in just two weeks, a 57% increase, but the final jump was based on only Ugx 51,500 worth of actual trading. In a thinly traded market, a rising share price does not necessarily mean the company is becoming more valuable. Sometimes very little trading can move the price sharply, even just before bad news arrives.
Two smaller things from the exchange. Stanbic declared an interim dividend of Ugx 4.30 per share on 15 September, about 4% of the share price, after withholding tax. You need to be on the shareholder register by Tuesday 13 October to qualify, and payment is expected around Wednesday 11 November. Centum Investments changed how some figures were classified in its earlier financial statements. The overall totals remain the same, but older figures may need to be rechecked when making comparisons.
The reserve requirement took effect. Commercial banks have had to hold 13.5% of customer deposits at the central bank since Thursday 24 September, up from 11%, the second increase this year. It leaves banks with less to lend, to bid with, or to buy dollars with, and it is the policy lever that has actually been moving: the headline Central Bank Rate has sat at 9.75% for over a year.
Fund managers Legacy Hills advises for
Legacy Hills Investments works alongside a select group of Uganda’s licensed fund managers, giving our clients access to unit trust and money market options across the industry rather than a single house view. The partners below are the names you will see referenced across our research.
- 01Old Mutual Investment Group Uganda (OMIG) Limited
- 02Britam Asset Managers Company (Uganda) Limited
- 03ICEA Lion Asset Management Uganda Limited
- 04SBG Securities Uganda Limited
- 05Sanlam Allianz Investments Limited
- 06GenAfrica Asset Managers
- 07Cornerstone Asset Managers Limited
- 08Kura Asset Managers
- 09Xeno Investments
- 10NSSF Uganda
- 11XENO Investments Kenya
- 12Etica Capital Kenya
Hold something back
Wednesday asks for a decision it will not explain. Bids for the Treasury bills close at ten in the morning; Uganda’s inflation figure and America’s arrive afterwards. Seven days later a three-year, a ten-year and a twenty-year come back, priced with the 16.25% now visible to everyone. The twenty-year re-opens carrying a stale 15.000% from before the repricing. Either it moves up towards the twenty-five-year and becomes the better entry, or it does not, and the twenty-five-year stays the only place on the curve paying for length. Either answer is worth a week.
Published by Legacy Hills Investments Limited, an independent investment advisor. This newsletter is for general information only and does not constitute investment advice. Figures are drawn from Bank of Uganda’s auction press release of 23 September 2026 and Invitation to Tender Issue No. 1235 of 24 September 2026; the Ministry of Finance, Planning and Economic Development’s Performance of the Economy monthly reports for April to August 2026; the Uganda Securities Exchange’s announcements and company filings; NSSF’s 14th Annual Members’ Meeting as reported by Daily Monitor, The Independent and Nile Post; the August 2026 Monetary Policy Statement and Summary of Macroeconomic Indicators; the Uganda Bureau of Statistics; the Federal Reserve, S&P Global, the South African Reserve Bank, the International Monetary Fund and the International Coffee Organization; and public market reporting for oil, gold, coffee and currencies. Investors should confirm current rates before making decisions.
