How to Buy a Treasury Bond in Tanzania: Amina's First Bond

Amina is an illustration, not a real person. She is a salaried professional in Dar es Salaam with TZS 3,000,000 saved. She wants a steady income for the next ten years and has heard that the Government sells bonds. Here is how she buys her first one, step by step.

Step 1: She opens a CDS account

Government securities are held electronically in the Central Depository System (CDS). Amina visits an authorised Central Depository Participant (CDP), such as a licensed stockbroker or a participating bank, and opens a CDS account. She brings her identification and bank details so coupons and repayments can be paid to her bank account.

Step 2: She finds the next auction

On the auction calendar she sees the upcoming bond auctions. Each one has a Bank of Tanzania tender notice that sets out the bond, the auction date, the minimum bid, the steps, the coupon dates, the settlement date and the tax.

The notice for bond No. 722 (BoT notice), for example, states a minimum bid of TZS 1,000,000 in multiples of TZS 100,000, coupons on 16 April and 16 October, and that bids close at 11:00 a.m. on the auction date.

Step 3: She decides how much and how to bid

Amina chooses TZS 3,000,000 of face value: above the minimum and a multiple of TZS 100,000. She can place a competitive bid (she names the price) or a non-competitive bid (she accepts the auction's weighted average price). As a first-time investor she reads our guide to the two kinds of bids before deciding.

Step 4: Her CDP submits the bid

Bids are submitted online through CDPs before the 11:00 a.m. deadline on the auction day. Amina confirms the details with her CDP and makes sure the money will be available for settlement.

Step 5: She checks the result

BoT publishes results right after the auction, and UCHUMIKA shows them as soon as they appear. If her bid is accepted, she pays on the settlement date in the notice (usually the next working day in recent notices) and the bond appears in her CDS account. If the bid is not accepted, nothing is paid and she can try again at a later auction.

Step 6: Coupons arrive twice a year

With a 12% coupon (an illustration), TZS 3,000,000 of face value pays TZS 180,000 every six months (3,000,000 × 12% ÷ 2), plus or minus any withholding tax stated in the notice. At maturity, Amina receives the TZS 3,000,000 face value back. Our calculator works this out for any bond and amount.

What Amina learned

• Start with the notice: it has every rule for that auction.

• Bid in the right amounts: at least the minimum, in the stated steps.

• Know your bid type before the deadline.

• Keep cash ready for the settlement date.

• Track the bond afterwards on its bond page.

Ready to try it yourself? Our Start investing guide walks through the same steps with today's terms.

This article is for education only and is not investment advice. Examples marked as illustrations are not current rates. Confirm terms in the official Bank of Tanzania notice and speak to a licensed adviser before you invest.