The Central Bank of Kenya introduced a new simple way to invest in Government Securities, DhowCSD. The portal enables Kenyans to open Central Securities Depository (CSD) accounts and bid for government securities.
How to sign up for DhowCSD
You don’t need to create a new DhowCSD account if you already have a securities investment account. All your details will be transferred automatically. It can be accessed through a mobile app on Android and Apple store, or the website. There you get the option to select the “Already have a CSD account” option to activate your account. A token will then be sent to the email address on record, where you’ll be prompted to create a password for the DhowCSD account.
Use the “Create Account” option on the app or website if you don’t have an account. Once you’ve filled in the prompts listed, a token will be sent to the email address you provided to verify your account.
Why should you sign up for DhowCSD?
The Central Bank of Kenya is discontinuing manual drop-off bids for investors. The CBK will also no longer be accepting cash or cheques for payment of Treasury Bills and Bonds. All payments will be made via commercial banks. When using DhowCSD, you can bid for bills and bonds in primary auctions and the secondary market as a direct CBK client.
The CBK announced the new trading platform and the issuing of new Fixed Coupon Treasury Bonds where it’s trying to raise Ksh. 40 billion. Treasury bonds are available as two-year bonds and five-year bonds. Trading will start on August 22, 2023.
Why are bills and bonds a good investment?
A government bond is an investment that enables the government to borrow against the local market. A 5-year bond will have an interest rate of 16.8%, while 2-year bonds will have interest rates determined by market bids. The interest rate is fixed, meaning the rate determined at auction is locked for the entirety of the bond. It’s a safe and low-risk investment.
Treasury bonds and bills are also attractive to investors because of their high liquidity and fixed returns. You can purchase bonds when the CBK auctions them. You get revenue after every 6 months as the bond matures. Treasury bonds can grow over a year to 30 years. Treasury bonds require a minimum investment of Ksh. 50,000. With DhowCSD, you can make your investments from the comfort of your smartphone.
There are also infrastructure bonds that the government uses for infrastructure projects. They’re tax-exempt, which makes them popular in the market. Another type of Treasury bond is zero coupon bond. These don’t have interest payments and sales are discounted. Treasury bills also work the same way.
The remittances are deposited in your commercial bank account on the due date when the bills mature. You can also roll over your revenue to invest in upcoming bonds. The app or website will give you the option to provide rollover instructions.
Treasury bills are weekly short-term investments that mature after 91 days, 182 days, and 364 days. You’ll get your remittances upon investing in three months, six months, or a year. Bills are popular because they’re sold at a discount, but remit full value. Treasury bills require a minimum investment of Ksh. 100,000 invested in Ksh. 50,000 installments.
Check out DhowCDS here.
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