The emergency hike, and the hundred and fifty basis points behind it
- 12.00%
- Central Bank Rate, from 9.75%
- +2.25%
- The special meeting move
- 7.0 – 7.5%
- New inflation forecast
- 1.95%
- The 364-day's real return
- 1The emergency hike.
- 2What the BOU revised and by how much.
- 3Kenya's shilling did not move. Uganda's moved more than 2 per cent.
- 4Where the curve sits.
Bank of Uganda raised the Central Bank Rate from 9.75% to 12.00%, at a special meeting called outside the published schedule. It is a 2.25% move, the first increase since 2024, and it comes with the inflation forecast revised up by a percentage and a half and the growth forecast cut by one.
The mechanical consequence is immediate and large. Every Treasury bill on the curve now yields less than the policy rate. The 364-day last cleared at 11.502% and the Central Bank Rate is 12.00%. The 2-year sits exactly on it. Banks can obtain liquidity from Bank of Uganda at a rediscount rate of 15.00%.
Weekly Markets Overview: 5th – 16th September 2026
A. What changed since last week’s overview
| Instrument | Was | Now |
|---|---|---|
| Central Bank Rate | 9.75% | 12.00% |
| Change | — | +2.25% |
| Rediscount rate | 12.75% | 15.00% |
| Bank rate | 13.75% | 16.00% |
| CBR band | ±2pp | ±2pp, unchanged |
| Cash Reserve Requirement | 11.00% | 13.5% since 24 September |
Bank of Uganda noticed that money was leaving the country because interest rates in the U.S. increased, which made investing there more appealing. As a result, the local currency, the shilling, lost value. This drop in value made things like fuel and food more expensive. To prevent these higher costs from becoming a long-term problem, the central bank decided to raise interest rates by 2.25%. Now, the big question is whether this new interest rate of 12.00% will be enough to attract investors back to the shilling.
What the BOU revised and by how much
| Forecast | Aug-26 | Oct-26 | Change |
|---|---|---|---|
| Core inflation, next 12 months | 4.0 – 4.5% | 5.5 – 6.0% | +150bp |
| Headline inflation, next 12 months | 5.5 – 6.0% | 7.0 – 7.5% | +150bp |
| GDP growth, FY2026/27 | 7.0 – 7.5% | 6.0 – 6.5% | −100bp |
A hundred and fifty basis points added to the inflation forecast in eight weeks is the real content of this statement. The interest rate increase is a result of this situation. Since August, all the real returns we’ve reported were based on an expected headline rate of 5.5–6.0%. However, the Bank’s new figures show that this estimate was too high by 1.5%. This adjustment affects the shortest-term financial products the most.
The short end has lost two-thirds of its real return without a single price moving.
And the growth downgrade is the price being paid. The expected economic growth for the year 2026/27 is now predicted to be between 6.0% and 6.5%, down from the previous estimate of 7.0% to 7.5% attributed to stricter financial conditions both globally and domestically, the currency depreciation, and higher energy prices. BOU has set a reserve requirement of 13.5% and the interest rate at 16.00%. As a result, the cost for businesses to borrow money, which has already increased from 16.93% to 17.32% between June and July, is likely to go up even more. This is part of the bank’s plan to control the economy, and people will notice the effects.
Kenya’s shilling did not move. Uganda’s moved more than 2 per cent.
Reuters quoted both currencies from commercial banks on Thursday 15 October. The Kenyan shilling stood at 129.75/95 to the dollar, unchanged on the week. The Ugandan shilling stood at 3,990/4,000 against 4,080/4,090 at the previous Thursday’s close, a gain of about 2.25% of its value. A trader told the agency the Ugandan unit “will continue weakening driven by the same fundamentals”, though at a slower pace.
Kenya faced the same dollar, the same oil price and the same American inflation figure in the same days. Its central bank held the Central Bank Rate at 8.75% on 7 October, with September inflation at 6.8% against 6.6% in August. Kenya’s inflation is the higher of the two and its currency is the steady one, so neither inflation nor policy tightness explains the difference.
On the Central Bank of Kenya’s own series the shilling was not quite static. It stood at KSh 129.94 to the dollar on 8 October against 129.71 on 1 October, a move of 0.18%, which the Bank described as having “remained stable against major international and regional currencies”. Its reserves fell US$194m over the same week, from US$14,930m to US$14,736m, and import cover from 6.1 months to 5.9. The Bank reports no intervention in the currency market and attributes that fall to nothing in particular — reserves move on debt service, import payments and valuation as well.
What the comparison establishes is narrow: the shock was not uniform across East Africa. It does not establish that Uganda could have had Kenya’s week by choosing differently.
American inflation comes in hot, and the cost of dollars rises again
United States consumer prices rose 3.7% in the year to September, with core inflation at 2.6%, in the Bureau of Labor Statistics release of Wednesday 14 October. Gasoline rose 34.2% over the same period — the same oil shock Uganda is absorbing, arriving in an American statistic.
The figure was firmer than forecast and raised expectations of a further Federal Reserve increase at the 27–28 October meeting. No probability is quoted here: no named futures source was obtained for this week, and the market commentary available disagreed with itself.
| Maturity | 7 Oct | 8 Oct | 9 Oct | 13 Oct | Change |
|---|---|---|---|---|---|
| 3-month bill | 4.22% | 4.23% | 4.25% | 4.26% | +4bp |
| 1-year | 4.42% | 4.44% | 4.47% | 4.48% | +6bp |
| 2-year | 4.77% | 4.75% | 4.80% | 4.79% | +2bp |
| 10-year | 5.28% | 5.22% | 5.24% | 5.21% | −7bp |
| 30-year | 5.67% | 5.60% | 5.60% | 5.56% | −11bp |
The short end rose and the long end fell across those five days, a curve flattening on expectations of near-term tightening. No values are published for Monday 12 October, a United States holiday, and the week’s release stops the day before the inflation figure landed.
The channel to Uganda runs through Bank of Uganda’s own October statement, which says rising interest rates abroad and global risk aversion have “increased attractiveness of investing abroad relative to investing in Ugandan financial assets” and have “limited capital inflows”. An American one-year bill paying 4.48%, with better than a one-in-three chance of another rise this month, is that sentence in figures: every basis point the American short end adds is a basis point Uganda must beat to attract the same dollar.
IMF expects oil to fall in 2027 — the most hopeful figure in this issue
The International Monetary Fund’s October World Economic Outlook, published Tuesday 13 October, forecasts global growth of 3.1% in 2026 and 3.4% in 2027.
For Uganda the consequential line is the oil assumption. The Fund’s own assumptions section states that “the average price of oil will be $95.74 a barrel in 2026 and $87.39 a barrel in 2027” about 8.7% cheaper, on this desk’s arithmetic on those two figures. If that holds, the dominant pressure on the shilling eases next year without Uganda doing anything.
Brent traded between US$104 and US$106 through the middle of this week, settling near US$106.06 on Wednesday about 9% above the level the Fund expects the whole of 2026 to average. The current price is the stress case, not the forecast.
Washington weighs tanker sanctions relief.
The United States is reported to be considering easing sanctions on shadow-fleet tankers in order to bring down record tanker freight rates. The item reads as distant from Uganda and is not.
Bank of Uganda’s October statement shows that 79% of the 1.4 billion dollar deterioration in Uganda’s current account came through the services account, which the Bank attributes “largely to freight charges”, rather than through the goods bill. Shipping costs, not the oil price directly, are the largest measured channel of this year’s external shock on a country that pays to move every imported tonne twice by sea to Mombasa or Dar es Salaam, then inland by road or rail.
Sanctioning a large share of the world’s tanker capacity out of the legitimate market raises the price of what remains; releasing some of it lowers that price. If freight rates fall materially, four-fifths of this year’s external deterioration begins to unwind with no Ugandan policy change at all. The deliberation has not produced a decision.
World Bank cuts Uganda’s growth forecast and raises its inflation forecast
The World Bank’s October Africa’s Pulse update, reported on 7 October, cut Uganda’s growth forecast for the 2026/27 financial year to 7.4% from 8.5% in April, and raised its inflation forecast to 5.5% from 4.2%. It put public debt at 55.3% of GDP against 53.4% six months earlier, and the fiscal deficit at 5.2% against 5.0%. Growth for 2027/28 was raised to 9.2%, a revision driven by oil production rather than by anything in the current year. Bank of Uganda’s own forecast, published nine days later, is lower still at 6.0–6.5% a central bank forecasting below the World Bank for its own economy, which is unusual.
Elsewhere, euro area inflation rose to 3.8% in September from 3.2%, keeping pressure on the European Central Bank before its 29 October meeting. Kenya’s reserves fell on the week from 14,930 million dollars to 14,736 million, and from 6.1 months of cover to 5.9.
Gold settles above US$4,170 on the exchange’s own number
Gold’s December contract settled at Usd 4,170.10 an ounce on Thursday 15 October, up Usd 62.20 on the day, on COMEX’s own settlement as published in CME Group’s daily bulletin. Silver’s October contract settled at Usd 56.837, up Usd 1.287.
From this issue gold is taken from the exchange and not from a dealer. Every gold level this brief has carried until now came from a bullion merchant’s daily report, quoting spot, with no exchange or benchmark figure behind it. The London benchmark, the LBMA Gold Price, run by ICE Benchmark Administration would be better, but its daily series requires a licence and the World Gold Council has withdrawn its historical copy at the administrator’s request. The exchange’s published settlement is the most trusted gold price this desk can verify, and it carries a named contract month, as this brief already requires for Brent and robusta.
No weekly change is computed, for the second week. The earlier figures were a dealer’s spot quotes; this is a futures settlement. They are different bases and cannot be differenced. One full week of exchange settlements gives the first measurable weekly move, from the next issue.
Gold is Uganda’s largest export, at about 46% of goods earnings, and the price above US$4,000 has been doing real work. Bank of Uganda’s external accounts show the net goods deficit widened by only US$0.4bn over the year to August against a gross fuel-import shock several times that, because export earnings absorbed most of it and gold is the larger part of those earnings.
Robusta gives back half its rally as European deadline nears
The November robusta contract fell to 3,460 dollars a tonne on 9 October from 3,533 a week earlier, down 2.07%, returning about half of the previous week’s gain. Robusta is Uganda’s crop; the arabica price quoted in most coverage is a different market.
The export outturn is the harder number. On the Uganda Coffee Development Authority’s own August report, exports were 737,766 60-kg bags worth Usd 181.7m, or Ugx 678bn volume down 13.6% and value down 10.3% on August 2025. Robusta alone was 680,945 bags and Usd 161.1m, down 14.2% and 10.4%.
The structural development carries a hard date. The European Union Deforestation Regulation applies from 30 December 2026, eleven weeks away. European buyers will spend the fourth quarter hunting compliant origin. Ugandan robusta with farm-level geolocation and due-diligence paperwork is positioned to capture a premium; Ugandan robusta without it is positioned to lose the market. Coffee’s dollar earnings fell 18.4% at the last published outturn, on both price and volume, so a weaker shilling is being applied to a smaller dollar amount.
Oil rises on weather, and the pump follows with a lag
Brent settled at 104.72 dollars on Friday 9 October against 102.25 the previous Friday, up 2.42%, both on the December contract. Hurricane Isaias shut in about 1.5 million barrels a day, roughly 72% of United States Gulf offshore production. Pulling the other way, President Trump described talks with Iran as productive and China said it would resume refined-product exports after Golden Week.
Uganda imports refined product rather than crude, and diesel and jet-fuel markets remain the vulnerable part. Daily Monitor reported petrol above Ugx 7,000 a litre at major Kampala dealers on 5 October, against the Finance Ministry’s 6,529 for August. A 2.4% week on the futures screen is the smaller half of the problem; the pump is where it lands, with a lag, and the shilling has been lengthening that lag.
Where the curve sits
| Instrument and Maturity | Last Auctioned | Market yeild as at 13-Oct-2026 | Tax | After tax | Real (exact) |
|---|---|---|---|---|---|
| 91-day T-bill (31st Dec 2026) | 30-Sep | 9.98% | 20% | 7.98% | 0.68% |
| 182- day T-bill (1st Apr 2027) | 30-Sep | 10.89% | 20% | 8.71% | 1.36% |
| 364-day bill (30th sep 2027) | 30-Sep | 11.81% | 20% | 9.45% | 2.05% |
| 2-year bond (16-Nov-2028) | 23-Sep | 13.15% | 20% | 10.52% | 3.05% |
| 3-year bond (6-Sep-2029) | 07-Oct | 13.88% | 20% | 11.10% | 3.59% |
| 5-year bond (20- May 2032) | 23-Sep | 14.74% | 10% | 13.27% | 5.61% |
| 10-year bond (14-May 2037) | 07-Oct | 16.48% | 10% | 14.83% | 7.07% |
| 15-year bond (6-Sep-2041) | 23-Sep | 16.35% | 10% | 14.72% | 6.96% |
| 20-year bond (16-AUG-2046) | 07-Oct | 16.64% | 10% | 14.98% | 7.21% |
| 25-year bond (7-jul-2050) | 23-Sep | 16.69% | 10% | 15.02% | 7.25% |
What to do with this
- Do not buy the short end at any level printed before today. Currently, all the bills available are offering returns that are lower than the Bank’s expected interest rate and less than 2% after accounting for inflation. If someone tries to sell you a 364-day bill for around 11.5% or a 2-year bill for 12%, these are old prices that will soon be adjusted upwards by more than two percentage points. It’s better to wait for the auction on 21 October to get the updated prices.
- The long end remains the position, and the special meeting strengthens rather than weakens it. If you invested for 20 years and got a return of 16.925%, after paying taxes, you would actually make 15.23%. Even with inflation expected to be between 7.0% and 7.5%, you would still have a real return of 7.98%. The central bank has raised interest rates by 2.25% to prevent inflation from becoming a bigger problem. If they succeed, this will make the real return on existing long-term bonds better. The main worry now is if interest rates go up even more, not the inflation rate.
- Accept that further repricing is imminent and prepare for 28 October. Long yields have decreased significantly compared to before the annoucement. They are now 4.85% to 4.93% above the policy rate, down from 7.10% to 7.18%. This means that the extra interest investors would earn by holding these long-term bonds has become less attractive. Additionally, there is an upcoming auction on 28 October where four different types of bonds need to be sold into a banking system that now has less money available. Because of these factors, it’s not a good time to buy long-term bonds at the current prices, so it’s better to wait and see if their prices adjust.
- If you bought bonds in September, their value has gone down even more, but the advice on what to do hasn’t changed. A 2.25% policy move will cause the interest rates on long-term government bonds to go up, which means the prices of these bonds will go down. By October 7th, the value of a 20-year government bond had already decreased by about 9.8% in shillings and about 18% in U.S. dollars. This bond pays interest until it matures, and the government has taken steps to ensure that the interest payments keep up with inflation. However, selling these bonds at this time means turning a potential profit into a loss at an inconvenient time.
- For dollar-based holders, today is really good news. The dollar hasn’t changed yet, but the Bank has decided to raise interest rates by 2.25%, which could lead to a change. They’ve also identified that dollars leaving the country is the reason for the issue. This doesn’t mean it’s a good time to invest, but it shows that the authorities understand the problem better now.
Prepared by Glen Busobozi and Lutaaya Emmanuel Victor
B. Other Local News
CMA clears Dangote refinery share sale for wealthy Ugandan investors. The Capital Markets Authority has approved the offer of securities under the initial public offering of Dangote Petroleum Refinery and Petrochemicals FZE in Uganda, restricting it to wealthy and professional investors without defining either term.
In a public notice dated 6 October, the Authority said it was acting in line with sections 101 and 106 of the Capital Markets Authority Act, Cap 64. Under section 103 it granted the issuer an exemption from Part XII of the Act, which governs offers to the public, subject to conditions set out in the notice.
The approval follows an application submitted on the issuer’s behalf by Stanbic IBTC Capital Limited, seeking authorisation to promote, market and distribute the offer to eligible investors in Uganda. The Authority confirmed that the offer and its prospectus have been approved by the Nigerian Securities and Exchange Commission.
Three conditions attach to the approval. All marketing, distribution, promotion, solicitation or approach to prospective investors in Uganda must be undertaken through a CMA licensed intermediary only. Those intermediaries may act only after obtaining the Authority’s express written no-objection. And all such activity must comply with any further conditions, safeguards and disclosure requirements the Authority may impose from time to time.
The third condition carries the restriction. “The marketing and distribution of the offer shall be restricted to high-net-worth individuals and professional investors,” it reads, and the offer “shall not be promoted through indiscriminate advertising, mass solicitation, or any other means directed at members of the general public”. The notice attaches no monetary threshold to either category.
As at the date of the notice the Authority had authorised one intermediary, SBG Securities Uganda Limited, to market and offer the shares to Ugandan investors. It said the public would be notified of any other authorisation granted to any other licensed intermediary.
The Authority was explicit about the limits of what it had done. Its approval “does not constitute an endorsement or recommendation of the IPO, the securities being offered, or the investment merits of the offer”. It has not approved or endorsed the prospectus, nor assessed “the commercial merits, financial viability or expected performance of the investment”. The issuer and certain other entities involved in the cross-border custody and execution arrangements are not licensed or subject to its direct supervision. And the approval relates solely to this distribution in Uganda, and is not “a continuing standing approval for future offers, transactions or activities involving the Issuer or any participating intermediaries”.
Prospective investors were advised to understand the risks of investing in securities listed in a foreign jurisdiction among them foreign exchange risk, market risk, custody risk, taxation considerations and the mechanisms available for exercising investor rights to review all available documentation and to seek independent professional advice. Participation is through authorised CMA licensed intermediaries only.
Legacy Hills Investments has a commercial relationship with SBG Securities. This covers a regulatory decision and is not a recommendation.
Platinum Credit pays 16.5% to borrow for three years. Platinum Credit (U) Limited raised Ugx 30 billion in the first tranche of a medium-term note programme after investors bid Ugx 49.28 billion against an offer of Ugx 20 billion, a subscription of 246.40%. The company exercised a Ugx 10 billion green shoe option to lift the amount issued.
The notes were issued at par on 30 September in three series: 3 years at 16.50%, 5 years at 17.40% and 8 years at 19.00%, maturing in 2029, 2031 and 2034. Interest is paid every 30 December, March, June and September. They were listed on the Uganda Securities Exchange on 5 October.
Most of the money wanted five years. That series drew 30.09 billion of the 49.28 billion bid and was cut back to 13.86 billion, while the three-year was filled in full at 13.14 billion and the eight-year at 3 billion. Applications up to 1.5 billion shillings were allotted in full and larger ones scaled back at the issuer’s discretion, so small investors received what they asked for and big ones did not.
The 3-year coupon sits 2.50% above the 14.000% the government paid at its own 3-year auction a week later. It is the clearest available measure of what a Ugandan company pays to borrow against what the Treasury pays.
It has introduced KidNest, a savings and investment fund designed to help parents, guardians and well-wishers save for children’s future needs, such as education and healthcare, starting with just Ugx 20,000. The company has also introduced 24/7 mobile money services, allowing customers to invest, top up and withdraw without depending on banking hours. Its funds offer different investment options, with annual yields of 11% for the Money Market Fund, 12.94% for the Umbrella Fund, 13% for the Fixed Income Fund and 5.70% for the USD Fund. Minimum investments range from Shs20,000 for the Money Market Fund to Ugx 5 million for the Fixed Income Fund, while the USD Fund starts at Usd 100. Most funds allow withdrawals at any time, but the Fixed Income Fund pays out at maturity. Investors should confirm withdrawal timelines before investing money they may need urgently.
Britam Asset Managers Uganda is a Legacy Hills partner fund manager. The figures above are the company’s own published fund information and are carried here to inform, not to advise.
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
Wait For The Auction To Get The Updated Prices
Do not buy the short end at any level printed before today. If someone tries to sell you a 364-day bill for around 11.5% or a 2-year bill for 12%, these are old prices that will soon be adjusted upwards by more than two percentage points. It is better to wait for the auction on 21 October to get the updated prices. Then prepare for 28 October, where four different types of bonds need to be sold into a banking system that now has less money available. The main worry now is if interest rates go up even more, not the inflation rate.
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 Monetary Policy Statement for October 2026 of 14 October 2026, its Treasury bond auction press release of 7 October 2026 and its Treasury bill press release of 30 September 2026; the Capital Markets Authority’s Public Notice of 6 October 2026; the Uganda Securities Exchange; the Uganda Coffee Development Authority’s Monthly Coffee Report for August 2026; the Central Bank of Kenya’s Monetary Policy Committee release of 7 October 2026 and its Weekly Bulletin of 9 October 2026; the US Bureau of Labor Statistics’ Consumer Price Index release of 14 October 2026 and the Federal Reserve’s H.15; the International Monetary Fund’s October 2026 World Economic Outlook; the World Bank; CME Group’s daily bulletin for COMEX gold and silver settlements; Reuters; and Britam Asset Managers Uganda’s own published fund information. Britam Asset Managers, SBG Securities and Cornerstone Asset Managers are Legacy Hills partner fund managers; anything here touching them is written to inform and never to advise. Investors should confirm current rates before making decisions.
