The Bank of Uganda is auctioning Shs355bn ($96m) in Treasury Bills on Sept 24, 2025, to finance projects, attract investors, and strengthen the economy.
Kampala, Uganda — The Bank of Uganda (BoU) has launched a fresh auction of Shs355 billion ($96 million) in Treasury Bills, offering investors a safe and profitable option while helping finance the country’s development plans. The sale takes place on September 24, 2025, and comes as the government navigates tighter global financing conditions.
The central bank announced that the auction will feature three maturities. These include 91-day bills worth Shs25 billion ($6.8 million), 182-day bills at Shs75 billion ($20.3 million), and 364-day bills totaling Shs255 billion ($68.9 million). The securities are available to both domestic and foreign investors.
“The auction provides a stable investment avenue and supports the country’s broader economic agenda,” the Uganda Broadcasting Corporation reported, quoting BoU officials.
Why the Auction Matters
Uganda faces a budget deficit as spending outpaces revenue. For the fiscal year 2025/26, the government projects Shs31.9 trillion ($8.6 billion) in revenue against expenditures of Shs51.53 trillion ($13.9 billion). Treasury Bills, alongside longer-dated bonds, have become a key tool to bridge the financing gap. In June this year, the government raised $88 million in a rare private placement treasury bond auction.
The BoU has leaned on short-term paper to meet immediate cash needs while ensuring investor confidence. The approach also helps to manage liquidity and keep inflation under control.
According to Kikubo Lane, yields on government securities have recently climbed, reflecting both global pressures and local demand for higher returns.
Investor Appetite and Global Context
Ugandan government paper continues to attract significant interest. Demand has been supported by domestic pension funds, commercial banks, and insurance firms. Foreign portfolio investors have also increased their participation, seeking exposure to frontier African markets with strong growth potential.
Global conditions play a major role. The U.S. Federal Reserve has kept interest rates high, making global financing more expensive. Meanwhile, regional peers such as Kenya and Tanzania face fiscal challenges of their own. As a result, Uganda’s Treasury Bills offer relatively attractive yields for cautious investors.
The IMF has warned that frontier markets like Uganda must carefully manage debt sustainability. With external debt already estimated at $24.5 billion in mid-2025, the balance between borrowing and stability is delicate.
Debt Sustainability in Focus
Uganda’s domestic debt stock has risen as the government turns inward for financing. By issuing more Treasury Bills and bonds, it reduces reliance on costly external loans. This strategy lowers exposure to currency volatility and international credit risks.
However, it also raises the risk of “crowding out” private sector borrowing. Commercial banks often prefer risk-free government securities over lending to businesses. Economists warn that over time, this could dampen credit growth for small and medium-sized enterprises.
Still, the BoU insists that short-term securities remain vital for balancing fiscal needs with monetary stability. In an interview with SoftPower, analysts said the central bank’s discipline has helped maintain investor confidence despite global volatility.
Next Steps for Investors
Investors interested in today’s auction can participate through the Central Securities Depository System operated by BoU. Settlement is typically on a T+1 basis, meaning payment and allocation occur one day after the auction.
Successful bidders will earn interest based on the discount rate offered. The securities are backed by the government, making them among the safest investments available in the local market.
Market participants expect yields to remain elevated, given inflationary pressures and rising domestic borrowing needs. This may provide attractive returns for both institutional and retail investors.
Broader Economic Implications
The auction is more than just a fundraising exercise. It signals Uganda’s determination to sustain growth, manage inflation, and maintain macroeconomic stability.
According to Nile Post, investor interest in government securities has steadily grown in recent years. This has been aided by regulatory reforms and efforts to deepen Uganda’s capital markets.
For the government, the challenge remains balancing short-term borrowing with long-term debt sustainability. With infrastructure and social spending priorities expanding, Treasury Bills will continue to play a central role in bridging funding gaps.
Outlook
Uganda’s latest Treasury Bill auction underlines the delicate balance between funding needs and financial stability. As global markets remain volatile, BoU’s ability to attract investors at favorable rates will be closely watched.
Economists argue that consistent transparency and prudent fiscal management will be key. If managed well, these auctions could strengthen the country’s financial credibility and attract further international investment.
