Policy Watch

Debt vs GDP / Bonds vs bills

All Data - Uganda

Year 2012 2013 2014 2015 2016 2017
GDP (billions US$) 24.41 25.51 26.15 - - -
Total Outstanding Amount (Billion US$) 2.44 3.28 - - - -
Bonds 1.51 2.12 - - - -
Bills 0.93 1.16 - - - -
Outstanding Amount/GDP (%) 9.99% 12.86% 0.00% - - -

Country Summary

Uganda’s economic outlook is positive, with real GDP growth expected to reach 5.1% in 2016, compared to 5.3% in 2015, and 4.7% for 2014. This assumes that the government will maintain macroeconomic stability and tackle corruption. Growth will mainly be driven by strong performances in the industry and services sectors, and also by public infrastructure investment and other investments in priority sectors. Large infrastructure projects will boost manufacturing, as well as services, notably tourism. Rising private consumption will also drive growth. Credit expansion, which increased by 16% in February 2015, more than double last year’s growth rate, will boost consumption, as will higher government consumption in the run-up to elections. Investment in the energy sector will also boost growth, although the pace of growth has slowed in the past year as oil prices have fallen sharply. The issue of new licences for further oil exploration in the greater Albertan region will boost much-needed foreign direct investment.

Uganda’s Human Development Index (HDI) improved slightly to 0.483 in 2014, from 0.478 in 2013. This still falls below the 0.502 average for the world’s least developed countries (LDCs), and the 0.518 average for sub-Saharan Africa. Moreover, earlier progress towards Millennium Development Goals (MDGs) for health and education has stalled, with outcomes underperforming the goals due to insufficient funding. Nonetheless, there has been significant progress in increasing access to anti-retroviral treatment, in preventing mother-to-child HIV transmission, and in reducing the prevalence of malaria, which fell from 43% in 2009 to 19% in 2014. Poverty fell in all regions except the Eastern region, where it increased between 2009/10 and 2012/13. Although the Northern region has witnessed a significant reduction in poverty – from 60.7% in 2005/06 to 43.7% in 2012/13 – this still remains more than twice the national average. Uganda has steadily improved its performance in gender equality and women’s empowerment. Nonetheless, women continue to face discrimination, particularly in their access to economic opportunities and ownership of assets.

Source : African Economic Outlook 2016

Monetary policy & Public debt

In 2011, the Bank of Uganda (BoU) introduced a new monetary policy framework, the ILT framework, to tackle prevalent high inflation rates. The ILT framework is constructed around a medium-term inflation target set at 5% and a Central Bank Rate (CBR) serves as the intermediate target for the weekly interbank rates, The CBR is calculated according to inflation forecasts. The implementation of the new monetary policy framework proved successful: the inflation rate was reduced from 30.5% in October 2011 to currently 5.4% (as of June 2014).

Uganda 's public debt is conducted by 2 policies, the Public Debt Management Framework and the Medium-Term Debt Management Strategy. The 2013 PDMF sets the objectives of Uganda's debt management strategy which are to maintain a sustainable debt, finance the government's borrowing requirements at the minimum cost and promote the development of the domestic financial markets. The 2013-14 budget deficit was 4.4%, lower than the targeted 4.9% budget deficit for the period. 

The 2013 PDMF seeks to achieve a PV of debt equal to 50% GDP (a EAC criteria convergence) and a PV of nominal interest payments not exceeding 15% GDP. 

Market Structure

Market Participants


The Bank of Uganda (BoU) acts as the Bank agent and issuing authority of the government. No other public entities or state-enterprises are known to issue debt instruments.

In the corporate bond segment, commercial Banks are the only issuers. 

Investor base

Commercial banks represent the major class of investors in Treasury securities: at end of June 2014, they held 45.8% of the securities, followed by pension funds with 24.8% and offshore investors, 13.2%.

Other intermediaries

Primary Dealers (PDs) are the first connection point to any investor willing to purchase government securities in the primary market.

The Primary Dealership system has been in place since 2005.

Instruments issued

Treasury Bills

The BoU auctions T-bills with maturities of 91-, 182-and 364-days.

Treasury Bonds

Uganda Treasury bonds have maturities of 2-, 3-, 5- and 10-years.

Foreign bonds

In 2012, the African Development Bank launched a UGX 125 billion Medium Note Program for Uganda. The 2nd tranche of the program, valued at UGX 12.5 million, was offered for sale in May 2013. The securities were benchmarked against the 2-year Treasury bond.

In 2014, the government also contemplated issuing a Eurobond; there was a great enthusiasm in the continent for this instrument. 

Average yield-to-maturity and time-to-maturity

Yields on government securities increased; yearly rates for the 91-d, 182-d and the 364-d bills were respectively 8.6%, 10% and 11.9% in June 2014.

The BoU managed to lengthen the maturity profile of its domestic debt by introducing the 15-year bond.

Primary market and Secondary Market

Primary Market

Auctions are announced one week in advance in the press and on the BoU website. Currently, only PDs are allowed to participate in the market, although the BoU is looking at expanding the span of the participants in the near future.

Both competitive bids and non-competitive bids are accepted. The minimum amount to start in non-competitive bids ranges between UShs 100,000 and UShs 10 million; any amount greater than UShs 10 million is eligible for competitive bids. A maximum of four bids per maturity is allowed for competitive bidders.

Secondary market

OTC vs. Exchange-listed

All bonds trade and list on the Uganda Securities Exchange (USE). Trading of fixed-income securities can occur at any time of the day; however, trades need to be reported during the opening hours of the Exchange (8:30am-5:30pm; GMT +3). 

Secondary-market trading on debt securities is active.

Clearing, settlement and custody

The Ugandan Central Securities Depository (CSD) became operational on Sep 9, 2013. The CMA is awaiting to enforce the 2nd phase of the CSD implementation plan that will seek to include non-bank financial institutions.

The CSD will soon be complemented by a Primary Dealer Shared Gateway.

Recent Developments

The USE is seeking full demutualization. This process will facilitate the introduction of new investment vehicles and will speed the automation process of the Exchange. The BoU has sought the expertise of Thomson Reuters for the implementation. 

The year 2013-14 saw the first corporate bond listing on the USE and the introduction of a new tenure in the domestic debt market, the 15-year Treasuy bond..

In May 2014, Alt X, a subsidiary of the Mauritius AltX Africa Group, started operating in Uganda, as a way to serve the broader region of East Africa. The stock exchange will trade securities and derivatives. 

Investor Protection

The Constitution of the Republic of Uganda (1995) recognizes private property. The risk of expropriation is diminished by the Investment Code of 1991; the same code provides the legal framework to settle international disputes, along with the several multilateral agreements to which Uganda is a signatory.

Investor protection is also enforced by the Capital Markets Authority (CMA) and USE regulations. In addition, to foster responsible and ethical behavior, the USE has issued a Code of Ethics for the use of brokers and dealers.

Guide to Buying Bonds

Procedures for market participation

Any investor who wishes to purchase government securities in the primary market must contact a Primary Dealer (PD) and have or open an account at the Central Securities Depository (CSD). The list of investors that could participate in the government securities market is listed in the Central Bank website; they are:

  • Commercial banks
  • Insurance firms
  • Individuals
  • Government agencies
  • Pension funds
  • Individuals (of at least 18 years)
  • Offshore investors, provided they opened an account beforehand at the CSD, and invest through a Primary Dealer.

In the secondary market, the Uganda Securities Exchange (USE) provides a list of licensed brokers and investment advisors authorized to deal in the CSD.

Further information on Uganda Securities Market is provided in the Central Bank website. 

Settlement Cycle

The settlement time is T+1 in the primary market. In the secondary market, the time falls down to 0.


There is a 10% withholding tax applicable on interest income earned by investors, regardless of residency.

Market restrictions

Openness to international investors

There are no restrictions imposed on foreign investors in the bond market in Uganda.

Residents and non-residents alike are authorized to participate in the market.

Capital Controls

Capital controls were fully liberalized in 1997, along with the foreign exchange market.

Restrictions on foreign exchange and profit repatriation

Foreigners can hold foreign exchange accounts and purchase FX at any commercial bank without the approval of the Bank of Uganda (BoU).

Credit rating

In Jan 2014, S&P lowered the long-term credit rating on Uganda to B in the fear that the budget deficit of the country will widen, and following the retreat of donors in 2012 due to allegations of corruption in the country.

In Aug 2014, Fitch affirmed Uganda B rating on long-term foreign and local currency issuer efault. Moody’s has not assigned any rating to Uganda.

List of Primary Dealers

The Primary Dealership system became operational in 2005. The BoU has appointed six primary dealers to receive bids from investors; they are: 

Documents & Resources