How to make money from government bonds in Uganda

By December 28, 2019 News

So many times people have been blinded by the love of quick money. The truth is quick money is a myth it doesn’t exist. As a middle class person or entrepreneur I am sure you know this by now. Books like the richest man in Babylon teach us that you would rather invest and get a small return surely than end up losing all you capital in the hope of making impossible returns.

Here is a step by step guide on how to invest in government securities in Uganda.

  1. Open and SCD account. An SCD account a securities central depository account required to trade any financial assets in the country. They are like bank accounts for your stocks, bonds and other financial securities. These are regulated by the Capital markets authority and the central bank of Uganda. The forms can be picked up from the central bank or select retail banks and are submitted to the Bank of Uganda for account opening once filled out. You would need 2 passport photos, National ID and Bank account
  2. Bi-weekly bidding. Bids are availed in a weekly or bi weekly basis in the newspapers and the Bank of Uganda website.
  3. You can then submit your bid by filling in forms including how much you want to invest and your bank details included.
  4. The forms can then be submitted to your bank for processing.
  5. This has to be done by Monday as most bids are processed on Wednesday.

How much can you expect to make?

The bids vary in interest rates. If you have over 100million UGX you can negotiate rates with the central bank however for the secondary markets rates are given to you. The average rates range from 10-15% annualized

meaning;

If you invest 100 million. The Bank of Uganda would pay you 15 million less WHT.

How are returns given to you?
The returns are paid out to your bank account by Bank of Uganda.

Advantages of holding bonds in your portfolio

  1. Sure returns. You are always sure the government will pay you. The central bank of Uganda has a proven record of paying returns.
  2. Your initial capital is protected. If you have some money seated around. Rather than leaving it in the bank why not get some sensible interest as well?
  3. Better interest rates than any bank. The government securities pay better interest rates than any bank.

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