The Central Bank of the country [i.e. Bank of Tanzania] offers Treasury Bills as well as Treasury Bonds for investment. There are auctions conducted at regular interval through a competitive tender process in the Primary Market. Subsequently, the issued Government Securities is listed on the Dar es Salaam Stock Exchange where the trading takes place in the Secondary Market.
IMPORTANT: Earlier investment in Government Securities was restricted only to Tanzanian Citizens; but now East African Residents are allowed to invest into Government Securities up to a limit of 40%.
- Treasury Bills
Treasury Bills are short-term securities maturing within a year. In the Primary Market, the Bank of Tanzania [BOT] issues T-bills for the first time on a fortnightly basis. Subsequently sales and purchases of T-bills are conducted in the Secondary Market [at Dar es Salaam Stock Exchange].
Currently, the BOT issues T-bills in four maturities as follows:
- 35 days T-bills
- 91 days T-bills
- 182 days T-bills
- 364 days T-bills
For successful bids the settlement for making payment is T+1. On maturity, investors are paid face value [100%] of the respective T-bill. Income earned from T-bills is subject to the applicable withholding tax.
- Treasury Bonds
Treasury Bonds are long-term securities with maturity longer than a year. In the Primary Market, the Bank of Tanzania [BOT] issues T-bonds at regular interval [on monthly basis]. Subsequently sales and purchases of T-bonds are conducted on a continuous basis in the Secondary Market [at Dar es Salaam Stock Exchange].
Currently, the BOT issues T-bonds in five maturities as follows:
- 2 year T-bonds
- 5 year T-bonds
- 7 year T-bonds
- 10 year T-bonds
- 15 year T-bonds
For successful bids the settlement for making payment is T+1. Interest payment on the respective T-Bonds is paid on Semi-annually basis. On maturity investors are paid the par value plus the last accrued interest.
- Advantages of Investing into Government Securities
Key advantages of investing into Government Securities are as follows:
- Risk free instruments as they are issued by the Government;
- They are transferable and negotiable;
- They can be pledged as collateral security;
- Rate of return on Government Securities is competitive.