BOU's High Treasury Bills Yields Attract More Investors

9121 Views Kampala, Uganda
As high inflation bites, many Ugandans and offshore investors are finding a safe haven in Bank of Uganda’s lucrative treasury bills and treasury bonds.
 
Stephen Kaboyo, the central bank’s Director for Financial Markets, says yields on treasury bills and bonds now range between 23 to 23 percent, the highest and most lucrative since the start of the global credit crunch in 2008.
 
Treasury bills and bonds are marketable securities that the government sells in order to get money to meet its obligations. The Bank of Uganda also uses the securities to withdraw money from circulation and control inflation.
 
The difference between the two types of securities is that treasury bills are for a short period of a year and less while treasury bonds are issued in terms of two up to 10 years as with the Ugandan situation.
 
Kaboyo told Uganda Radio Network that because of the generous interests on the treasury bills and bonds, many investors are snapping up the bills and bonds to secure their monies and earn great interests.
 
He said most of those buying the securities are the rich, companies and foreign investors, leaving the bulk of Ugandans who should have benefited out in the cold.
 
Last year Bank of Uganda issued treasury bills and bonds worth hundreds of billions of shillings and all were snapped up.
 
The minimum competitive bid amount is 10.1 million shillings while a minimum non-competitive bid amount is 100,000 shillings.
 
Kaboyo said because of the huge disparity between those on the securities market and most Ugandans, the central bank is carrying out reforms to get more Ugandans on the securities market because it is the safest investment in the world.
 
Another concern about a lucrative securities market is that most investors get attracted and they flee the stock market where share prices fall down.
 
Presently the Ugandan stock market is in shambles with little activity on the bourse, mainly from Stanbic Bank, Bank of Baroda and Uganda Clays. The rest of the 16 listed companies are faring rather badly.
 
Kaboyo said the on going reforms in the financial market is to explore how more treasury bonds can be traded on the stock market so that many investors are retained.

 

About the author

David Rupiny
In his own words, David Rupiny says, "I am literally a self-trained journalist with over 12 years of experience. Add the formative, student days then I can trace my journalism roots to 1988 when as a fresher in Ordinary Level I used to report for The Giraffe News at St Aloysius College Nyapea in northern Uganda.


In addition to URN for which I have worked for five years now, I have had stints at Radio Paidha, Radio Pacis, Nile FM and KFM. I have also contributed stories for The Crusader, The New Vision and The Monitor. I have also been a contributor for international news organisations like the BBC and Institute for War and Peace Reporting. I am also a local stringer for Radio Netherlands Worldwide.


I am also a media entrepreneur. I founded The West Niler newspaper and now runs Rainbow Media Corporation (Rainbow Radio 88.2 FM in Nebbi). My areas of interest are conflict and peacebuilding, business, climate change, health and children and young people, among others."