How to Get Started with Government Bonds

Zambia K500 note

Government bonds are one of the safest and most popular investment options in Zambia. They are issued by the government through the Bank of Zambia (BoZ) to raise money for national development projects. In return, investors receive regular interest payments and the full principal amount at maturity.

If you're thinking about investing in government bonds, here’s everything you need to know to get started.

What Are Government Bonds?

Government securities in Zambia are divided into two main types:

Treasury Bills (T-Bills): These are short-term debt instruments with maturities of 91, 182, 273, or 364 days. Treasury Bills are sold at a discount and do not pay regular interest. Instead, you earn money from the difference between the purchase price and the amount you receive at maturity.

Government Bonds: These are medium- to long-term securities, typically issued for 2, 3, 5, 7, 10, or 15 years. They pay a fixed interest (coupon) twice a year and return your initial investment (principal) when the bond matures.

Both T-Bills and Bonds are considered low-risk because they are backed by the government.

Who Can Invest?

Almost anyone can invest in government securities in Zambia — whether you are a Zambian citizen, a foreigner, an individual, or an institution. To get started, you’ll need:

A local Zambian Kwacha bank account for receiving payments.

Registration with the Bank of Zambia Central Securities Depository (CSD) — this is where your bonds will be electronically recorded.

Minimum investment of K1,000.

For direct bidders, a Letter of Guarantee from your bank is required to confirm that funds will be available to pay for any bonds you win.

How to Buy Government Bonds

There are three main ways to buy government bonds:

1. Through Your Commercial Bank or Broker

Most investors find it easiest to buy bonds through their bank. Many Zambian banks, like Zanaco, facilitate the purchase of T-Bills and Bonds and also help manage your investments.

2. Directly from the Bank of Zambia

If you prefer, you can bid directly with the BoZ. You’ll need to complete an official application form and provide a Letter of Guarantee from your bank.

3. Online via the Bank of Zambia Investor Portal

The BoZ has made investing even easier through its Investor Portal (investorportal.boz.zm). Here, you can register, submit bids, and monitor your investments 24/7.

How the Auction Works

The government issues T-Bills every two weeks and bonds roughly once a month. Auctions are announced ahead of time through the Bank of Zambia website and public notices.

You can submit two types of bids:

Non-Competitive Bids (for amounts between K1,000 and K499,999): You agree to accept the yield determined by the auction.

Competitive Bids (for amounts of K500,000 and above): You specify the yield (interest rate) you are willing to accept.

If your bid is successful, you will be required to settle the amount through your bank.

Returns and Taxes

Government bonds offer two types of returns:

Periodic Interest: Bonds pay fixed interest every six months directly to your bank account.

Principal Repayment: At maturity, the government pays back the full face value of your investment.

Taxes:

A 15% withholding tax is applied to all interest income.

A 1% handling fee is also deducted.

For example, if you are supposed to receive K1,000 in interest, you would receive about K840 after taxes and fees.

Can You Sell Before Maturity?

Yes! If you need your money before the bond matures, you can sell your investment:

Treasury Bills can be sold to another investor or rediscounted (sold back to BoZ if the value is above K50,000).

Government Bonds can be sold to willing buyers through the secondary market, such as banks or on the Lusaka Securities Exchange.

However, the price you get may be higher or lower than your initial investment depending on market interest rates at the time of sale.

Things to Watch Out For

While government bonds are considered very safe, there are still a few risks to keep in mind:

Interest Rate Risk: If market rates rise, the value of your bond could fall if you try to sell before maturity.

Inflation Risk: High inflation can reduce the real value of your returns.

Liquidity: While you can sell before maturity, finding a buyer quickly is not always guaranteed.

Also, be sure to only use official platforms like your bank or the Bank of Zambia Investor Portal, and always double-check auction announcements and deadlines.

Final Thoughts

Investing in Zambian government bonds is a reliable way to grow your money safely over time. With a low minimum investment of just K1,000 and the option to invest online, government securities are now more accessible than ever.

If you are looking for a low-risk investment with predictable returns, government bonds might be the perfect starting point.