David Mwanje
Uganda is turning more to the domestic market to finance government spending, putting Treasury bills and bonds at the centre of its borrowing strategy and opening the government securities market to more Ugandan investors.
Uganda’s total public debt stock stood at about Shs143.92 trillion at the end of June 2026, up from Shs125.23 trillion a year earlier. Domestic debt accounted for Shs80.72 trillion, or 56.1 percent of the total debt stock.
The Bank of Uganda is encouraging more Ugandans to participate in the government securities market, where individuals can lend money to government and earn a return.
Speaking on the Bank of Uganda Connects podcast, Immaculate Nakato, Acting Team Lead in the Financial Markets Department, explained that Treasury bills and Treasury bonds are instruments used by government to borrow from the public.
Treasury bills are short-term securities issued for 91, 182 and 364 days. Treasury bonds are longer-term investments, with maturities ranging from two to 25 years.
Nakato said Ugandans can invest from as little as Shs100,000.
To participate, an investor needs an ordinary bank account and a Central Securities Depository account opened through a regulated commercial bank. The investor can then instruct the bank to purchase the securities on their behalf.
Treasury bills are sold at a discount, with the investor receiving the full face value at maturity. Treasury bonds pay interest through coupons, usually every six months.
Government’s increased reliance on the domestic market comes at a time of growing pressure on public finances.
The 2026/27 National Budget Framework Paper projects domestic borrowing of Shs8.953 trillion, compared with Shs11.381 trillion in 2025/26. Government plans to reduce domestic borrowing to ease pressure on private sector credit and manage rising debt and interest costs.
Domestic interest payments are projected at Shs10.716 trillion in 2026/27, while total interest payments are expected to reach Shs12.735 trillion.
Nakato cautioned investors about interest rate and price risks, particularly when Treasury bonds are sold before maturity.
In a phone interview, economist Samuel Muhindo said bond prices can fall when market yields rise.
“When market yields rise, bond prices can fall. An investor selling at the wrong time can therefore make a loss. Investors who hold securities to maturity are exposed differently from those actively trading them,” Muhindo said.
The growth in domestic debt also raises questions about how much money government absorbs from the local financial market and what remains available for businesses and households seeking credit.
Muhindo said investors should understand the tenure, expected return, prevailing market conditions and risks before committing their money.
