The Ugandan government generated Shs1.576 trillion in July 2024 through the issuance of treasury bills and bonds, according to the latest economic performance report.
The funds were allocated towards refinancing mature Treasury instruments (Shs527 billion) and financing budgetary items (Shs1.048 trillion).
Experts suggest that reforms to the Capital Markets Act could lead to increased revenue through these financial instruments. Louis Namwanja, a commercial lawyer, noted that external factors have driven offshore investors to African markets, including Uganda.
“The Federal Reserve rates have been increasing, which forced offshore investors to seek opportunities in African markets, including Uganda, to invest in treasury bonds,” Namwanja explained.
The report also highlights a decline in yields for most treasury bills, except for the 364-day tenor, which maintained an annualized yield of 13.6%. Despite an oversubscription of treasury bills in July, experts believe that more can be done to improve the fixed-income market in Uganda.
Namwanja identified one of the key challenges as the opacity of Uganda’s securities market.
“The Capital Markets Authority (CMA) seems to lack visibility, and a lot of information is unavailable to retail investors, which limits investment,” he said.
Proposed reforms in the Capital Markets Amendment Bill, which has yet to be passed by parliament, include measures to increase investor protection and the licensing of primary dealer banks. Experts believe that these reforms could address the structural issues in Uganda’s fixed-income market and lead to increased government revenue through the issuance of Treasury instruments.
