Assume -You have a friend, called Otieno who needs a loan for his butchery. You don’t have time yourself to run that kind business but you believe there is opportunity in the meat industry and figured you might as well benefit in some way from the returns of this business.
So you lend Otieno Ksh.100,000 payable in three years which he will use to refurbish his butchery.
However you can’t lend Otieno Ksh.100,000, wait three years and only get back Ksh.100,000. That would be unfair to you because you could have done something else with the money i.e. there is an opportunity cost to lending Otieno the money.
So Otieno agrees to pay you interest of 10% per annum to compensate you for this opportunity cost.
Because of the nature of how money goes in and out of his business he can’t pay you every month. At the same time it is not fair on you to have to wait till the end of the year or end of three years to get your return.
Otieno therefore agrees to pay you interest every six months or semi- annually. In a year you would be earning Ksh.10,000 (10% of Ksh.100,000).
If he is paying interest every six months that will translate to you earning Ksh.5,000 every half year for three years.
The last payment at the end of three years will be the final interest of Ksh.5,000 plus you will get back the initial capital invested of Ksh.100,000.
Treasury Bonds is an area that a lot of people would like to invest in but think it is very complicated. I agree the way information is displayed about Bonds, is not very user friendly.
However our scenario above with Otieno is exactly how most bonds work only that Otieno is the government.
The government borrows from us to finance certain expenditures like infrastructure, development etc.
The loan that we give the government is referred to as a Bond.
Depending on the intended use of the funds, bonds can be issued from 1 year to 30 years. This is known as the tenor of the bond. The interest rate a bond will earn is referred to as the coupon.
If you invested in a three year bond with a coupon rate of 10%, the payments to you will be paid semi – annually in the exact same way as when you invested in Otieno’s business.
Now Otieno can decide to raise Ksh.1,000,000 for his business from various investors. Some will give 100,000; others 50,000; and others 200,000 depending on their ability at the time.
All Otieno is interested in is getting to a total amount of Ksh.1 million.
Whether you put in Ksh.50,000 or Ksh.200,000 you will all earn an interest rate of 10% p.a. on your money.
In the same way the government can opt to raise even Ksh.15 billion from various investors but the minimum they will take from any one investor is actually Ksh.50,000.
So as long as you have Ksh.50,000 you can invest in a bond.
Bonds, contrary to popular belief are not only for the wealthy or for institutions. If you put in Ksh.50,000 and someone else Ksh.50 million you will earn pretty much the same coupon (or interest rate) on your money.
Many people look at the Ksh.15 billion the government is trying to raise and instantly think their money is too little.
If you have idle money or looking for a secure place to invest, this is definitely worth considering. Your Ksh.50,000 sitting in a savings account would probably not earn the same rate of return as bonds.
Bonds are also a good way of securing a source of income and can come in handy when planning for Retirement.
Many people who want to keep a portion of their retirement portfolio safe while earning an income to help meet with everyday expenses have opted to invest in Bonds.
If you had built up a retirement portfolio of Ksh.10 million, this same bond would earn you Ksh.1.28 million per year which translates to Ksh.100,000 per month.
That could be a large portion of what you actually need to live off.
The Ksh.10,000,000 will remain intact while you just live off the income being generated.


How Do Treasury Bonds Make Money In Kenya?

Investors make money on Treasury bills because they are sold at a discount. For example, if you invest in a 91-day Treasury bill, you will pay less than the bill’s face value, but after 91 days you will receive the full face value. If you’d like to purchase a Treasury bill, you must invest a minimum of Kshs. 100,000.
How do Treasury bonds make money?
There are two ways that investors make money from bonds. The individual investor buys bonds directly, with the aim of holding them until they mature in order to profit from the interest they earn. They may also buy into a bond mutual fund or a bond exchange-traded fund (ETF).

Most Treasury bonds in Kenya are fixed rate, meaning that the interest rate determined at auction is locked in for the entire life of the bond.


Are Treasury Bonds Still A Good Investment?

Treasury bonds can be a good investment for those looking for safety and a fixed rate of interest that’s paid semiannually until the bond’s maturity.

Bonds are an important piece of an investment portfolio’s asset allocation since the steady return from bonds helps offset the volatility of equity prices.

Where can I invest my money in Kenya?

Best Investment Opportunities in Kenya
  • Real Estate. One of the best investments in Kenya is real estate. …
  • Treasury Bonds
  • Agriculture. …
  • e-Sports and Gaming. …
  • Virtual Education. …
  • Stock Markets. …
  • Gold, Precious Stones, and Metals. …
  • Urban Logistic and Transport. …
  • Cybersecurity and Data Storage.

Which Is Better Treasury Bills Or Bonds?

If the money will be needed in the short term, a Treasury bill with its shorter maturity might be best. For investors with a longer time horizon, Treasury bonds with maturities up to ten years might be better. Typically, the longer the maturity, the higher the return on investment.

Is M-Kiba Used For Treasury Bonds Only?

M-Akiba is a unique opportunity for Kenyans to save money, while at the same time earning very attractive interest rates from the Government.

M-Akiba is a retail infrastructure bond issued by the Government of Kenya, which seeks to enhance financial inclusion for economic development. It is a product by the Government of Kenya,  under the National Treasury, administered through the Central Bank of Kenya (CBK)  in collaboration with: Nairobi Securities Exchange (NSE), Central Depository Settlement Corporation (CDSC), Mobile Network Operators, and, the Kenya Association of Stock Brokers & Investment Banks (KASIB). The money raised from the bond will be used for funding of government infrastructural development projects, both new and on-going. Further, the M-Akiba bond is also aimed at enhancing the savings and investment culture by Kenyans.

To Learn more about m-Akiba, please visit



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