The latest Treasury Bills (T-Bills) data from the Bank of Uganda paints a clear picture of an upward shift in yields across all maturity periods.
Investors are now being rewarded with higher returns for lending to the government, particularly on longer-dated securities.
This shift in the market has implications for businesses, institutional investors, and the wider economy.
T-Bills are short-term government debt instruments issued to raise funds for public expenditure. They are considered among the safest investments because they are backed by the government, and their returns are fixed.
The August 1, 2025, data shows that yields have risen notably compared to earlier in the year, indicating changing dynamics in the money market.
Short-term securities, with less than 90 days to maturity, are offering average yields of 10.67 percent.
Prices for these instruments are high, typically above 97 shillings per 100 shillings of face value, reflecting lower risk and quicker repayment.
For investors, these instruments are ideal for parking funds temporarily while still earning competitive returns.
For businesses, this signals that short-term borrowing costs are also edging higher, as market rates often mirror T-Bill trends.
Medium-term securities, maturing between 90 and 180 days, present a more substantial opportunity. They are currently delivering average yields of 11.78 percent, with the highest in this category at 12.65 percent.
Prices are lower than those for short-term bills, which means a bigger discount and higher yield for buyers.
For corporate treasuries, these securities can serve as a mid-range investment to balance liquidity and return, offering a hedge against potential cash flow fluctuations later in the year.
The most notable development is in the long-term T-Bill segment, covering maturities above 180 days. This category now offers an average yield of 14.03 percent, with the highest yield reaching 15.17 percent for a one-year bill maturing in July 2026.
The steep increase in returns for longer maturities indicates that investors are demanding more compensation for tying up their capital for a full year. This also reflects broader market conditions, including inflation expectations and the central bank’s monetary policy stance.
In business terms, these higher yields mean the government is paying more to borrow, which can influence the pricing of credit across the economy.
When government borrowing rates are high, commercial banks tend to raise their lending rates to match the returns available from risk-free securities.
This can lead to tighter credit conditions for businesses, especially small and medium-sized enterprises, which may face higher costs for working capital loans.
At the same time, elevated T-Bill yields can attract more institutional investors, such as pension funds and insurance companies, into the government debt market.
For these institutions, long-term bills provide a predictable income stream and an opportunity to lock in higher rates before potential market shifts.
For exporters and companies with surplus cash, the current T-Bill market offers a low-risk way to earn double-digit returns while preserving capital.
From a macroeconomic perspective, the steeper yield curve where longer maturities carry much higher returns than shorter ones suggests that investors expect current tight monetary conditions to persist.
This shape of the curve can also signal that inflation pressures remain in the background, prompting the central bank to maintain a cautious policy stance.
For ordinary savers, the implications are straightforward: government securities are now more rewarding than they have been in recent months.
However, locking in funds for a year comes with the trade-off of reduced liquidity, which means careful consideration is needed before committing capital to longer-term bills.
For businesses, the T-Bill trend serves as both a benchmark and a signal. On one hand, it provides an indicator of future borrowing costs and the overall cost of capital.
On the other, it represents a competitive investment alternative for managing surplus funds. Corporate decision-makers can use these instruments to balance risk, return, and liquidity in their financial strategies.
As the government continues to issue T-Bills to finance its operations, the interplay between investor demand, yield movements, and broader economic conditions will remain central to Uganda’s financial landscape.
The August 2025 figures underscore that in the current market, patience pays longer commitments are being rewarded with significantly higher returns, but businesses and investors alike must weigh these against their liquidity needs and market outlook.