The shilling stopped falling and went the other way

Bank of Uganda’s rate peaked at 4,495.48 on Tuesday 27 October, a record and the Bank’s closing level on Friday 30 October was 4,349.76, a recovery of 3.35% in the value of the shilling across four sessions. It remains 16.78% weaker on the year.

Between the peak and the recovery sat the largest bond auction the Bank runs, and it was expensive: on Wednesday 28 October the Treasury accepted Ugx 1,880.9 million against an offer of Ugx 1,400 million, and the 25-year cleared at 18.475%, the highest long-dated yield in the last eight months. On Friday the Bureau of Statistics put October inflation at 5.8% against 4.6 in September, with food crops at 10.7% and diesel 49.2% dearer than a year earlier. Stanbic Bank Uganda published a repricing, taking its shilling prime rate to 21.75% from 19.5%.

Abroad, the Federal Reserve held its range at 3.75 to 4.00% with two members dissenting in favour of a rise, the European Central Bank held, and tanker freight, which had been falling for three weeks, rose on every route Uganda’s imports travel. Treasury bills return on Wednesday 4 November, and that auction is this issue’s lead.

Prepared by Lutaaya Emmanuel Victor and Busobozi Glen

B. Last week

The currency

The shilling strengthened between Tuesday 27 October and Friday 30 October. The dollar fell from a mid-rate of UGX 4,495.48 to UGX 4,349.76, meaning the shilling regained 3.35% of its value over those three days. Compared with the start of the year, when the dollar stood at UGX 3,619.97, the shilling was still 19.48% weaker on Tuesday and 16.78% weaker on Friday.

What may have caused the recovery?

The Bank of Uganda has not explained the shilling’s recovery or confirmed the amounts involved in its two October interventions on 14 and 22 October. The only figure available is an analyst’s estimate that the first intervention involved about USD 30 million, which the Bank has not confirmed.

There are two possible reasons for the recovery.

• First, on Tuesday 27 October, the Finance Minister told Parliament that government would not spend money defending fuel prices. This may have calmed a market where people had been rushing to buy dollars, reducing the pressure on the shilling.
• Second, the government bond auction on 28 October may have helped by reducing the amount of cash circulating in the banking system. The Bank refused to accept two-year bond bids above 16%, taking UGX 193.3 billion against an offer of UGX 250 billion, despite receiving UGX 550.3 billion in bids. It accepted higher rates only on longer-term bonds, where buyers are mainly local pension funds rather than foreign investors who might quickly convert their money into dollars.

When investors paid for the bonds on Thursday 29 October, UGX 1,733.6 billion was taken out of the banking system. This left less shilling cash available to buy dollars. However, some money may have returned to the system through repayment of maturing government debt, and the exact amount is not published.

The Bank’s earlier tightening may also be helping. The Central Bank Rate has been 12.00% since 14 October, while the cash reserve requirement is 13.5%. These measures make shillings more expensive to borrow and less freely available, making it harder to hold large positions against the currency.

The recovery is not yet secure

It is too early to tell which of these factors had the biggest effect. Month-end dollar sales by exporters may also have contributed. More importantly, none of these developments means Uganda’s underlying supply of dollars has improved.

If the recovery was mainly caused by money being temporarily removed from the banking system, the shilling could come under pressure again when that money returns. The next bond auction and the Bank’s figures on foreign investors’ holdings of government securities should help show whether the shilling can maintain its recovery without relying on this temporary reduction in cash.

Last week’s bond auction: the result, and why it came out that way

What the government has to borrow

To understand how last week’s bond auction turned out, and how the auctions from here are likely to go, we first have to understand what the government needs to borrow and how far it has gone. The amount Bank of Uganda puts on offer at each auction is not set by the market. It comes from the government’s borrowing plan, which is public. Annex 1 of the Budget Speech for 2026/27 sets out how much the Ministry of Finance has to raise this year, and the Ministry’s monthly Performance of the Economy reports show how much it has raised so far.

The government plans to borrow Ugx 25,942 billion at home this year. Just over half of it, Ugx 13,968 billion, is refinancing: new debt sold to repay old debt as it falls due. The rest, Ugx 11,974 billion, is new money to finance this year’s budget. By the end of September, with a quarter of the year gone, the government had raised 34.2% of the total, comfortably ahead of schedule. But the lead came entirely from refinancing, where it had done 48.9% of the year’s work. On new money to finance the budget, it had done only 17.2%, about a third behind where it should be. In short, the first quarter did one half of the job: the debt falling due was repaid early, but little of the money the budget needs was raised.

The quarterly average hides how quickly that was changing. New money to finance the budget was minus Ugx 92.60 billion in July, when the government repaid more debt than it sold, then Ugx 600.41 billion in August and Ugx 1,546.37 billion in September. To finish the year on plan, it needs Ugx 1,102 billion of new money to finance the budget each month, and September alone ran at 1.40 times that pace. The Treasury came to the 28 October auction already borrowing hard and speeding up, not scrambling to catch up.

What it does not have is room to spare. Between 1 October 2026 and 16 June 2027 there are 26 auctions left, 16 for Treasury bills and 10 for bonds. If Bank of Uganda keeps offering the amounts it has offered all year, those auctions will put Ugx 17,140 billion on sale. The government still needs Ugx 17,063 billion, or 99.6% of everything on offer, leaving just Ugx 77 billion spare over nine months, less than a quarter of a single bill auction. That has two consequences. If one auction raises less than planned, the shortfall cannot be made up at a later auction of the usual size, so accepting more than was offered is the plan’s only cushion. And if a future auction notice moves away from the usual sizes (Ugx 15 billion, 35 billion and 300 billion for bills), that would be the Ministry signalling that it is short of money, and it would tell us more than any auction result.

Where the money is coming from, and where it is not

Tax collection is the weak spot, and the thing most likely to change the auctions. With a quarter of the year gone, the government had collected only 18.3% of its domestic revenue target of Ugx 45.96 trillion. To reach it, it must collect Ugx 4,173 billion a month for the rest of the year, against an average of Ugx 2,801 billion a month in the first quarter, an increase of 49%. The Uganda Revenue Authority has missed its target in each of the last five financial years. If the first quarter’s shortfall of Ugx 925.69 billion repeats every quarter, the year ends Ugx 3.70 trillion short. That is equal to 31% of all the new borrowing planned for the year, while the auction calendar has only 0.45% of spare room.

On the spending side, the Ministry’s own figures show what the government protects when money is tight. Every line in its first-quarter table was off plan except one: interest, which was paid at exactly 100.0% of plan in July, August and September, Ugx 4,205.27 billion planned and Ugx 4,205.27 billion paid. Capital spending, on things such as roads and power lines, is what gave way. It ran at 52.3% of plan in July, 51.9% in August and 83.5% in September, 63.0% for the quarter. For anyone who holds government bonds or bills, that is reassuring: the Treasury pays its lenders first. For contractors, suppliers and the firms that build roads, power lines and water schemes, it is the opposite, and it is the clearest sign in this issue of where spending in the economy will and will not come from.

The auction: Ugx 1,400 billion offered, Ugx 1,880.9 billion accepted

On 28 October Bank of Uganda offered Ugx 1,400 billion of re-opened bonds and accepted Ugx 1,880.9 billion, 134.3% of what it offered. Investors had bid Ugx 2,989.1 billion in all. The highest yield, or interest rate, the Bank accepted was 16.000% on the two-year bond, 16.800% on the five-year, 17.925% on the fifteen-year and 18.475% on the twenty-five-year.

Why the Bank accepted more than it offered

Put the plan and the calendar together and the result makes sense. Accepting more than was offered is the only cushion the calendar allows, and that is what happened. The extra Ugx 480.9 billion accepted on 28 October is 6.25 times the whole year’s spare room, raised in a single morning.

The Bank accepted most where buyers were most plentiful, and they were most plentiful for the longest bonds. Bids for the 25-year bond were 3.014 times the amount offered; for the 5-year, only 1.383 times. In September’s bill auctions the pattern was the reverse: bids were 4.11 times the offer for the 91-day bill but 1.79 times for the 364-day. The buyers are different. Pension funds want long-term bonds and rarely buy short-term bills.

That is why the Bank could hold out on price for short-term borrowing but not for long-term borrowing. For the two-year bond it received Ugx 550.3 billion of bids against a Ugx 250 billion offer, yet took only Ugx 193.3 billion, refusing to pay more than 16.000% even though it had bids for more than twice the offer. For the 25-year bond it took Ugx 933.0 billion against a Ugx 350 billion offer (266.6%), accepting 88% of all bids at rates up to 18.475%.

So the government’s debt did get longer last week, but not because the Treasury set out to lengthen it. A Treasury that only wanted longer-dated debt would not need to accept 34.3% more than it offered. One that had sharply stepped up its new borrowing, still needed Ugx 9.92 trillion of new money to finance the budget and had to raise 99.6% of everything its calendar offers accepts more because it must, and the buyers with money to lend wanted long bonds. The next test is the bond auction on 25 November. If it again accepts more than offered on the long bonds, this reading holds. If it accepts extra on the short bonds, or accepts only what it offered or less, the picture changes.

What it raised, and what it will cost

The Treasury received Ugx 1,733.6 billion in cash but took on Ugx 1,880.9 billion of debt that it must repay. The difference arises because the fifteen- and twenty-five-year bonds were sold below face value, at 87.648 and 90.409 per 100, so Ugx 147.3 billion of the new debt (7.8%) brought in no cash at all. The auction also added Ugx 293.3 billion a year of interest payments, known as coupons. Against a domestic interest budget of Ugx 12,351.53 billion for the year, one morning added 2.37% to the annual interest bill, and the twenty-five-year bond’s share, Ugx 149.3 billion a year, will be paid until July 2050.

That comes on top of a debt bill that is already rising fast. Interest on domestic debt goes from Ugx 9,478.71 billion in FY 2025/26 to Ugx 12,351.53 billion in FY 2026/27, up 30.3%, and the domestic debt to be rolled over goes from Ugx 10,027.84 billion to Ugx 13,967.77 billion, up 39.3%. Interest on domestic debt alone takes 26.8% of the Ugx 46.03 trillion of revenue in the Budget Speech’s fiscal framework (a slightly different measure from the Ugx 45.96 trillion headline target). Every extra percentage point paid on the Ugx 11.97 trillion of planned new borrowing costs Ugx 120 billion a year. The Bank refused to pay more than 16.000% for 2-year money but paid 18.475% for 25-year money, a gap of 2.475 percentage points. That gap is the price of a calendar with no spare room.

Inflation: prices rose faster in October, led by food

Prices are rising faster. The Uganda Bureau of Statistics said on Friday 30 October that annual inflation, the rise in the average cost of living over the past twelve months, reached 5.8% in October, up from 4.6% in September. That is the highest rate in the Bureau’s table for the past thirteen months and the biggest one-month jump over that period. Prices in October alone were 1.1% higher than in September.

Food is the main reason. Prices of food crops, the fresh produce sold in markets, were 10.7% higher than a year earlier, more than double September’s 4.5%. Dry beans cost 22.5% more than a year ago, pineapples 25.5% and sweet potatoes 15.1%, and in October alone beans rose 13.9% and matooke 16.2%. Food crops make up less than a tenth of the basket the Bureau measures, but they are what every household buys, so this is the rise people feel first. It shows in who was hit hardest: low-income households in Kampala faced inflation of 6.7%, the highest of any group, with their food prices up 11.0%.

Fuel is the second pressure. Energy, fuel and utility prices were 15.4% higher than a year ago, with diesel up 49.2%, petrol 34.3% and kerosene 33.4%. Those costs are reaching fares: transport inflation rose to 11.9%, and passenger transport was 14.6% dearer than a year earlier. Staples are climbing too, with maize flour up 6.2%, rice 8.2%, beef 9.2% and cassava flour 37.0%.

The rise is also spreading. Core inflation, which leaves out food crops and fuel because their prices swing the most, rose to 4.4% from 3.7%, and the cost of services rose 5.3%. When core inflation climbs, higher prices are no longer confined to a few items, and that is what worries a central bank. Bank of Uganda expects inflation to average 7.0 to 7.5% over the next twelve months, and its Monetary Policy Committee meets on 12 November.

Banks are passing on the rate rise: Absa, Stanbic and dfcu

Borrowing from a bank is about to cost more. On 14 October Bank of Uganda raised its Central Bank Rate, the benchmark that guides what banks charge, by 2.25% to 12%, to slow rising prices and support the shilling. Three large banks, Absa, Stanbic and dfcu, have now told their customers that they are passing that rise on.

The change is to each bank’s prime lending rate, the rate it charges its strongest borrowers. Most people and small businesses pay more than prime, so when prime rises, their rates rise with it. Absa went first, taking its shilling prime rate to 21.75% from 19.50% on 1 November. Stanbic Bank Uganda, the country’s largest bank by assets, makes the same move on 1 December, and its mortgage reference rate, the starting point for home loans, rises to 19% from 17.5%. dfcu raises its shilling prime rate to 22% from 20% on the same day, and its rate for dollar loans to 14% from 12%.

This affects people who already have loans, not only new borrowers. Stanbic says the new rates apply to existing and new shilling loans, and dfcu says the same, subject to each loan agreement. On a loan whose rate moves with prime, a rise of 2.25 points means about Ugx 225,000 more interest a year on every Ugx 10 million borrowed, or roughly Ugx 19,000 a month. Absa and Stanbic are passing on the central bank’s rise in full; dfcu is passing on 2 of the 2.25 points. Other banks have not yet announced changes, but if they follow, average lending rates across the country will rise from the 17.90% last reported for August.

Coffee: the fall is entirely robusta

Uganda earned less from coffee in September. The country exported 735,435 bags of coffee, each weighing 60 kilogrammes, worth USD 186.92 million, according to the Uganda Coffee Development Authority’s monthly report. That is 12.4% fewer bags than in September 2025, and 13.9% less money.

Uganda grows two kinds of coffee. Robusta is the one most farmers grow, and it made up 85% of September’s exports. Arabica, the highland coffee from areas such as Mount Elgon, sells for more: it fetched USD 6.4 a kilogramme in September against robusta’s USD 3.9. The whole of the fall came from robusta, whose exports were down 18.9% in bags and 23.9% in value on a year earlier. Arabica went the other way, up 56.0% in bags and 52.6% in value.

Selling more of the dearer bean would normally lift the average price Uganda earns, but it did not. The average came to USD 4.2 a kilogramme, 10 US cents lower than in September 2025, because robusta itself is fetching less: its earnings fell faster than its volumes, which means each kilogramme brought in about 6% less than a year ago. The Authority says world prices eased slightly in September on expectations of a bigger harvest in Brazil. Farmers are already feeling it. The farm-gate price of kiboko, dried robusta cherries, averaged UGX 5,410 a kilogramme in September, down from UGX 5,750 in August.

Over the full coffee year to September, Uganda exported about 8 million bags worth USD 2.1 billion, down 3.4% in volume and 9.4% in value on the year before. Italy was the biggest buyer in September, taking 21.2% of exports, followed by Sudan at 18.5% and India at 10.3%. Coffee is Uganda’s leading export earner, so lower earnings mean fewer dollars coming in at a time when the shilling is under pressure.

Students can start investing with Cornerstone from UGX 10,000

Students can now start investing with Cornerstone Asset Managers for as little as UGX 10,000, according to a representative of the fund manager speaking at the 11th ASAMU Annual Summit at the former Digital Lab on Wednesday 4 November. Students can then add to their investment from UGX 1,000 at a time.

To qualify, a student has to show the fund manager their student identity card. The representative said the aim is to make it possible for students to start investing. The UGX 10,000 entry is far below Cornerstone’s usual level: its website sets the minimum first investment in its Uganda Shilling Income Fund at UGX 100,000, with top-ups from UGX 10,000.

Cornerstone runs unit trusts, which pool savings from many people and invest them mainly in government securities and other fixed-income assets. It is licensed by the Capital Markets Authority, and its funds’ money is held by a custodian bank, KCB Bank, rather than by the fund manager itself. We have not yet seen written terms for the student offer, so anyone interested should confirm the details, including who qualifies and which fund it applies to, with Cornerstone directly.

Bank payment systems close from Thursday evening to Monday morning

If you need to send or receive a large or urgent bank payment this week, do it before Thursday evening. Bank of Uganda says two of the main systems banks use to move money between each other will be switched off from 5:00 p.m. on Thursday 5 November until 9:00 a.m. on Monday 9 November, while it carries out a planned upgrade.

The two systems are the Real Time Gross Settlement system, known as RTGS, which banks use for large and urgent transfers that arrive the same day, and the Automated Clearing House, or ACH, which handles cheques and bulk payments such as salaries and supplier payments. Neither will work during the closure, so payments that depend on them will have to wait until Monday morning.

The Bank says the upgrade will make Uganda’s payment systems more reliable and better able to work with those of its neighbours, as part of an East African Community plan to make payments across the region’s borders easier and safer. It has advised businesses, government bodies and individuals to make time-sensitive payments before the closure begins, and to ask their own bank about other ways to pay in the meantime. It will issue a further notice once the systems are back.

The Federal Reserve held, and two of its members voted to raise

America’s central bank, the Federal Reserve, kept its main interest rate unchanged on Wednesday 28 October, in a range of 3.75% to 4%. That rate matters well beyond the United States, because it sets the cost of borrowing in dollars around the world. The decision was not unanimous. Ten of the twelve voting members agreed to hold, but two, Governor Lisa Cook and Cleveland Fed President Beth Hammack, wanted to raise the rate by a quarter of a percentage point. The Fed last raised rates in September.

In its statement, the Fed said the American economy is growing at a strong pace and that inflation “remains elevated”, well above its 2% goal. It said it wanted more information before deciding its next step. Two days later, two senior officials made clear which way they lean. Lorie Logan, president of the Dallas Fed and a voting member this year, said the Fed “needs to implement at least two more 0.25% rate increases”. Alberto Musalem of the St. Louis Fed said further increases “will be necessary, and soon”. The Fed’s next meeting is on 8 and 9 December.

Why this matters in Uganda: when interest rates in America rise, or are expected to, investors can earn more by keeping their money in dollars, so less of it flows into countries like Uganda. Bank of Uganda made this point in its October policy statement, saying higher interest rates in advanced economies have made investing abroad more attractive and limited money coming into Uganda, adding to pressure on the shilling.

Markets took the same view. The yield on the 10-year US government bond, a benchmark for long-term borrowing costs, rose to 5.05% on the day of the decision from 4.99% the day before, and was 4.98% on 29 October. When long-term rates rise after a central bank holds, it usually means investors expect the pause to be short. By comparison, Uganda’s 364-day T-bill is expected to clear at about 14.85% at this week’s auction, roughly 10% more than the US 10-year. That extra return is what investors ask for to hold shillings rather than dollars, and it is part of what Uganda pays to borrow in its own currency.

Oil, gold and coffee: the prices that matter most to Uganda

Three world prices matter more to Uganda than almost any other: oil, which the country buys, and gold and coffee, which it sells. Last week oil rose while gold and coffee fell, which is the wrong way round for Uganda on all three.

Oil went up because of fighting around the Strait of Hormuz, the narrow sea lane through which about a fifth of the world’s oil passes. On the night of 29 October a tanker there was hit by explosives attached to its hull from a small boat, according to the UK’s maritime security agency, UKMTO. Brent crude, the world benchmark, ended the week at USD 117.64 a barrel for December delivery and rose 13.6% over October. Shipping costs for oil tankers also rose again after falling the week before. Uganda imports all its fuel, so every rise feeds into pump prices, transport fares and the dollars the country must find to pay for imports.

Gold fell for a different reason. Higher oil prices keep inflation up, which makes further interest rate rises in America more likely, and gold pays no interest, so it becomes less attractive when rates are expected to rise. Gold ended the week at about USD 3,875 an ounce, down 3.7% and its lowest in more than a year. Gold is one of Uganda’s biggest exports by value, so a lower price means fewer dollars earned from it.

Arabica coffee fell 6.6% over the week, to 287.20 US cents a pound, as good weather in Brazil, the world’s biggest grower, improved the outlook for its next crop. That matters to the farmers who grow Uganda’s arabica, mainly in highland areas such as Mount Elgon, because export prices feed through to what buyers pay at the farm gate. American shares also slipped, with the S&P 500 down 0.6% for the week, after disappointing results from Alphabet and Intel set off a sell-off in technology stocks.

Kenya: higher inflation, but a steadier currency

Prices are now rising faster in Kenya than in Uganda. The Kenya National Bureau of Statistics said on Friday 30 October that annual inflation reached 7.3% in October, up from 6.8% in September, driven mainly by food, up 10.2%, and transport, up 17.1%. Uganda’s figure, published the same day, was 5.8%.

Yet Kenya has not needed to raise interest rates. The Central Bank of Kenya kept its main rate at 8.75% at its meeting on 7 October, where it has been since February, compared with 12% in Uganda. The difference is the currency. The Kenya shilling has barely moved, trading at KSh 129.96 to the dollar on 29 October against KSh 129.91 a week earlier. The Uganda shilling, by contrast, was still 16.8% weaker than at the start of the year at the end of October.

Both countries are paying the same higher price for imported oil, so the comparison shows that Uganda’s problem is mainly its currency rather than a regional rise in prices. Investors are also behaving in a similar way in both markets: at Kenya’s Treasury bill auction on 29 October, bids for the 91-day bill reached KSh 40.6 billion against KSh 8 billion on offer, the same rush for short-term government paper seen in Uganda. But the price is very different. Kenya’s 364-day T-bill pays around 9%, while Uganda’s is expected to clear at about 14.85% this week. Much of that gap is the extra return investors ask for to hold a currency that has been falling.

On Wednesday 4 November Bank of Uganda is selling Ugx 350 billion of Treasury bills on behalf of the government: Ugx 15 billion of 91-day bills, Ugx 35 billion of 182-day bills and Ugx 300 billion of 364-day bills, settling on Thursday 5 November. A Treasury bill is a short loan to the government. The buyer pays less than its face value today and receives the full amount when it matures; the difference is the return, taxed at 20%. Banks bid for large amounts, but anyone can take part from Ugx 100,000 through a commercial bank, accepting the average rate set at the auction.

Expected clearing levels

We expect the 364-day T-bill to clear at about 14.85%, up from 14.502% at the last auction on 21 October, with the 182-day at about 14.10% and the 91-day at about 11.90%. The 364-day T-bill matters most because it makes up Ugx 300 billion of the Ugx 350 billion on offer.

Two things push rates up.

• Prices are rising faster, with inflation at 5.8% in October against 4.6% in September, and lenders want to be paid more than inflation. Bank of Uganda’s policy committee also meets on 12 November, and buyers will want protection in case it raises rates again.

Two things hold rates down.

• The government does not badly need this money: Ugx 350 billion is about 2% of what it still has to borrow this year, so the Bank can turn away expensive bids, as it did at last week’s 2-year bond. And the shilling has recovered, to Ugx 4,349.76 to the dollar at Friday’s close from a record Ugx 4,495.48 on 27 October, which eases the fear that has been pushing rates higher.

The number to watch is the 91-day bill. At the last auction it cleared at 11.733%, below Bank of Uganda’s 12% policy rate, even though bids were one and a half times the amount on offer. If it clears at or above 12% on Wednesday, the central bank’s rate rise is finally reaching the shortest government borrowing. Our view would also change if events move: a shilling that holds below Ugx 4,250, or a much cheaper oil price, would pull rates lower, while a shilling back above Ugx 4,450 or a further tightening by Bank of Uganda would push them higher.

Where each government security stood on Wednesday 4 November, from the 91-day T-bill to the 25-year bond. The market yield is the return a buyer would earn today if they held the security to maturity. After tax is that yield less withholding tax, which is 20% on bills and shorter bonds and 10% on the longer bonds. Real is the return left after inflation, using 7.25%, the midpoint of Bank of Uganda’s forecast for the next twelve months.

• First, the practical point. Bank of Uganda’s systems for large bank transfers and cheques close from 5:00 p.m. on Thursday 5 November until 9:00 a.m. on Monday 9 November. If you plan to pay for government securities, move savings between banks or make any large payment, do it before Thursday evening.
• If you bought the 15- or 25-year bond at last week’s auction, you are well paid. The 25-year cleared at 18.475%, which is about 16.6% a year after tax: roughly 8.7% more than Bank of Uganda’s forecast inflation of 7.0 to 7.5%, and about 10.2% more than October’s actual inflation of 5.8%. The 15-year, at 17.925%, returns about 16.1% after tax, roughly 8.3% above forecast inflation. Those are the best returns above inflation this market has offered in years. Since the auction, the market yield on the 25-year has eased to 17.90%, and because bond prices rise when yields fall, your bond is already worth a little more. Expect the price to keep swinging in both directions, but that only matters if you have to sell before it matures.
• For new money you will not need for many years, the long bonds still pay the most. At Wednesday’s market yields the 25-year returns 16.11% after tax, about 8.26% above inflation, and the 15-year 15.57%, about 7.75% above. The catch is the commitment: if rates rise further, the price you could get by selling early would fall, so only use money you are sure you can leave alone.
• For money you may need within a year, or if you would rather wait and see, the 364-day T-bill is the sensible choice. At our expected 14.85% it returns about 11.9% after tax and gives your money back in a year, when you can decide again. Bank of Uganda’s policy committee meets on 12 November and the next bond auction is on 25 November, so a bill keeps your options open while both play out; a 20-year bond would tie you in until 2046. If your amount is small, bid non-competitively through your bank, from Ugx 100,000: you do not have to name a rate, and you receive the average rate set at the auction.
• The 2-year bond is the weakest choice on the list. Because it is taxed at 20%, it returns 12.41% after tax at today’s market yield, only about one percentage point more than the 364-day T-bill for twice the time. Bank of Uganda itself turned away nearly two-thirds of the bids for it on 28 October rather than pay more than 16%. If you are willing to go beyond a year, the 5-year, taxed at 10%, returns 14.32% and is better value than the 2- or 3-year.
• If a bank or broker offers you an older bond rather than one at auction, check its yield against the table in section F before you buy. A bond offered at a yield below today’s market level costs more than it should, and the gap is money you give away.
• Finally, money left in an ordinary account earns very little while prices rise 5.8% a year, so idle cash is quietly losing value. And if you have a loan whose rate moves with your bank’s prime rate, expect higher repayments from November and December; paying some of it down may be worth more than any of the returns above.

General information only, not personal investment advice. Yields are market levels at 4 November 2026 from section F; real returns use 7.25% inflation.

Prepared by Lutaaya Emmanuel Victor and Busobozi Glen

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.

1. 01Old Mutual Investment Group Uganda (OMIG) Limited
2. 02Britam Asset Managers Company (Uganda) Limited
3. 03ICEA Lion Asset Management Uganda Limited
4. 04SBG Securities Uganda Limited
5. 05Sanlam Allianz Investments Limited
6. 06GenAfrica Asset Managers
7. 07Cornerstone Asset Managers Limited
8. 08Kura Asset Managers
9. 09Xeno Investments
10. 10NSSF Uganda
11. 11XENO Investments Kenya
12. 12Etica Capital Kenya

First, the practical point. Bank of Uganda’s systems for large bank transfers and cheques close from 5:00 p.m. on Thursday 5 November until 9:00 a.m. on Monday 9 November. If you plan to pay for government securities, move savings between banks or make any large payment, do it before Thursday evening.

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 press release for the 2, 5, 15 and 25-year Treasury bond auction of 28 October 2026, its Invitation to Tender Issue No 1237 of 29 October 2026, its Monetary Policy Statement for October 2026 and its published daily exchange rates; the Ministry of Finance, Planning and Economic Development’s Performance of the Economy reports for July, August and September 2026 and Budget Speech FY 2026/27 Annexes 1 and 2; the Uganda Bureau of Statistics Consumer Price Index for October 2026; the Uganda Coffee Development Authority Monthly Coffee Report for September 2026; the Kenya National Bureau of Statistics and the Central Bank of Kenya; the United States Federal Reserve; Reuters, Kitco News, Yahoo Finance and UKMTO; and market yields as at 4 November 2026. 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.