Treasury bills are a secure, short-term investment, offering you
returns after a relatively short commitment of funds.
Its a short-term maturity note issued by the government as a primary
instrument for regulating money supply and raising funds via open
market operations.
In simpler terms the government is basically borrowing from you.
Treasury bills are short term i.e. they mature within 90 days.
Treasury Bills and Bonds are risk free.As long as Kenya has a
government and exists as a republic, you will get your money and the
interest.
Procedure used to apply for Treasury Bills in Kenya
*Go to CBK and get a form to open a CDS account.
*You will take the form to your bank for it to be endorsed.
*Return it to cbk with passport photo, copy of ID, copy of pin
*Wait for at least two weeks and you will have your cds account.
*Afteryou get your cds account info, go and bid for the tbill on a
thursday before 2pm
*Make sure in the application form you tick the average rate so that
you are assured of getting the bill.
*First application is a min of 100K..*On Friday call the cbk office
and you will be told the amount to pay which should be paid by 2pm on
Monday latest or you are locked out and they can block you from
particpating in future bids.
*They will also tell you your reference number so you can pay the
amount in your virtual account.
POINTS TO NOTE
1. Bills require minimum 100k and if you want more, you must add in
increments of 50k. M-Akiba takes minimum 3k but their rates are fixed.
2. Bills are currently paying lower interest than bonds. (This is the
usual trend in KE except some time back when no one was lending to
govt and bills rate were higher).
3. While Bills are for 3, 6 or 12 months, bonds are usually for 5, 10
or 15 years and it may be a bit hard(not impossible) to liquidate
before then in the secondary market. So depends on how long you want
to invest and your goals.
4. To bypass the minimum requirement, You could speak to authorised
agents such as banks about them investing on your behalf instead of
you doing it directly. However, they will charge you a commission and
end up reducing your returns.
6.Interest earned on Treasury Bills is usually taxed at 15%. With
Treasury Bonds, you have to check the details of the specific one you
are buying, some are taxed at 15%, others 10% and others especially
infrastructure bonds) are not taxed at all.
