Diaspora Bonds | Government Bonds – An Investment Opportunity For The Ugandan Diaspora Community
The Government of Uganda recognises the Ugandan Diaspora as a powerful resource in the development of the economy, as viewed from the significant size of the remittances from abroad, among others. Owing to this, deliberate efforts have been made by the Government, with support from the UNDP, to increase awareness on investing in Government of Uganda securities, with a medium-long term aim of issuing bonds specifically targeted to the Diaspora.
Why should I invest in Government bills and bonds?
- These are risk free, liquid and provide a reasonable and consistent return to the investors
- Bond coupon payments are made every six months and you have an opportunity to re-invest the coupon
- Bonds can be used as collateral for loans
- The investment horizon ranges from 91-days, 182-days, 364-days, 2 years, 3 years, 5 years, 10 years and 15 years
- A bond can be sold on the secondary market for a capital gain
- Investment opportunities avail themselves at least three times a month; twice for Treasury bills, once for Treasury bonds
- Initial investment of UGX 100,000 only
- Investing in Government bonds is one way in which you can make a contribution to the development of the economy.
Real life examples of how to benefit from bond investments
The infant/school boy/girl; can use this as a savings opportunity since rates are usually competitive, compared to savings accounts, etc. The minimum investment size of UGX 100,000 would suit this group
The Business man/woman; Cash in a bond can be used as collateral for a loan;
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- The Business man/woman; Cash in a bond can be used as collateral for a loan;
- The Retired worker; A constant cash-flow is available if one invests his retirement package gradually in a bond, while preserving Capital
- A Diaspora worker sending funds to his/her family for fees; they could invest in a bond, and the coupon could pay the fees
- A Diaspora worker interested in working for a target period; the infrastructure developed from the proceeds of the bond will enable them find a better environment at home when they return (e.g., the Israelis after the holocaust)
How do I start investing?
- Open a Central Securities Depository system (CSD) account with a Primary Dealer bank (Barclays, Baroda, Stanbic, Standard Chartered, DFCU and Centenary)
- An SSL (Standard Secure Language) Certificate will be sent to your email address; follow the instructions in the email and download it onto your PC
- You will receive the bond prospectus two-weeks ahead of the auction
- You could consult the BOU website to view the prevailing market yields from the yield curve; which will guide you as you price your bid.
- You then submit your bids online; this way, a message will go to your commercial bank, which will in-turn update your CSD profile
- Bond results will be sent to your emails (or you can log onto your account and monitor your profile)
- Bond coupons and interest will be paid directly into your local account
Arnold Bagubwagye
Assistant Director, FMDS
Financial Markets Department
Bank of Uganda
About the Author
I would like further assistance in reagards to the Bond investment and how to go about it.Potential Invester. Looking forward to your response.Thank you.
Hi there, the first step towards investing in Government securities is by opening up a CSD account with a Primary Dealer bank in Uganda. There are six Primary Dealer banks in Uganda; Stanbic, Standard Chartered, Barclays, Baroda, Centenary and DFCU.
While you do that, please forward us your email address through which the SSL certificate will be forwarded to your account. Through this email address, we will send you instructions on how to access the Market, how to monitor your portfolio, prospectuses on bond auctions, bond results, and all the necessary information that you will require.
We also request you to inform more of the diaspora community so that we can get more diaspora contacts. Contacts (emails only) can be sent to abagubwagye@bou.or.ug
Incidentally there happens to be an investment boutique in London specializing in Sub-Saharan debt (treasury bills & bonds) and equity markets.They cater for both diaspora and local investors who have no competent knowledge and wherewithal in capital markets. These chaps simplify the entire investments process: from opening up CDS a/cs with your respective commercial bank as well as stock brokerage firm to establishing staggered bond ladder tenures, well diversified stocks portfolios. They have curved out their niche in supporting and facilitating individual/retail investors venturing into equities (stocks & shares) in Uganda, Rwanda, Kenya, Tanzania and Zambia. Visit them at http://www.10pstreet.net
Just to clarify on my earlier response, the SSL (standard secure language) certificate will give you secure access to the Government securities market. Once you download it onto your PC, you will be required to set up a password, which will grant you access to the Central Securities Depository (CSD) at the BOU where you will send your bids.
NB; you should ensure that your local account is funded with the bid amount prior to submission of your bids.
Please feel free to ask me as many questions and I promise I will answer them to the best of my abilities.
Regards,
Arnold bagubwagye
Assistant Director, Financial Markets Department
Bank of Uganda
abagubwagye@bou.or.ug
Its a very nice topic and good information shared by you. Thanks a lot for sharing this with us.
I would like to invest in treasury bonds/bills