The Ugandan government successfully raised a total of shs1.576 trillion in July 2024 through the issuance of treasury instruments, according to the latest performance of the economy report.
The funds were generated from both Treasury bills and Treasury bonds, with shs 823 billion raised from Treasury bills and shs753 billion from Treasury bonds.
Of the total amount raised, shs527 billion was allocated to refinancing mature Treasury instruments, while the remaining shs 1.048 trillion was directed towards financing other budgetary items.
However, experts believe that with reforms to the Capital Markets Act, the government could raise even more through these financial instruments.
Louis Namwanja, a commercial lawyer, noted that external factors, such as the increasing rates by the Federal Reserve, have driven offshore investors to African markets, including Uganda, to invest in Treasury bonds.
"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%.
The 91-day tenor yield edged down to 9.9% from 10.7% in June 2024, while the 182-day tenor yield dropped to 12.9% from 13.1% in June.
Despite an oversubscription of Treasury bills in July, experts believe that more can be done to improve the fixed-income market in Uganda.
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One of the key challenges identified by experts is the opacity of Uganda's securities market.
They argue that the lack of transparency and availability of information for retail investors limits the potential for investment in this sector.
"The Capital Markets Authority (CMA) seems to lack visibility, and a lot of information is unavailable to retail investors, which limits investment," Namwanja 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.
