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Investment Opportunities in Kenya: A 6-Part Series Part 2B: Treasury Bills

“Managing your wealth well is like tending a beautiful formal garden – you need to start with good soil and a good set of tools. Just as good soil has the proper fertility to nourish a plant, having the right foundation in financial literacy should empower you to potentially cultivate a successful investment portfolio. This 6-Part Series on Investment Opportunities in Kenya is part of my financial education series to help educate you on the fundamentals of investing as you prepare to tend your very own financial garden.”

~ Rachael Mboya (LL.M.) Uni. of Nairobi, Advocate of the High Court of Kenya

In our Part 2A of this Investment Opportunities in Kenya series, we explored what Treasury Bonds are and who can invest in a Treasury Bond. In this week’s article, we now explore more about investing in Treasury Bills and whether they offer a good & risk-free investment option.

More often, you will see newspaper advertisements inviting the general public to invest in government/treasury Bills, which advertisements are normally done by the Central Bank of Kenya & other commercial banks. To a lay man, Treasury Bills may be viewed as only available for investment by corporates and wealthy businesspersons, however, that is not the case, and I shall address the same in this article.

Government securities are considered risk-free investments. Government securities provide a return and/or a consistent source of income over a specified period of time. Investors who buy these securities are loaning money to the government, which promises to repay them after a specified period of time, called maturity. 

In Kenya, the National Treasury offers two types of government securities: Treasury bills and Treasury bonds.

Treasury Bills and Bonds are referred to as fixed-income securities. This is because the return the investor gets is usually paid out in fixed interest payments on fixed dates over a fixed period of time. 

A.   What are Treasury Bills?

A Treasury Bill is a paperless short-term borrowing instrument issued every week by the Government through the Central Bank of Kenya (as a fiscal agent), to raise money on short term basis – for a period of up to 1 year. Treasury bills are issued in maturities of 91, 182 and 364 days. Treasury bills are sold at a discounted price to reflect investors’ return and redeemed at face (par) value.

This means that if you invest money in a Treasury bill, you will receive your money back within either three months, six months or one year, depending on the bill you choose. For example, if you invest in a 91-day Treasury bill, you will pay less than the bill’s face value, but after 91 days you will receive the full face-value.

B.   Who can invest in Treasury Bills?

Anyone can invest in a Treasury Bill as long as one has a Central Depository System (CDS) Account with the Central Bank of Kenya, the minimum amount required to invest in each issue, and has satisfied all the requirements stated when applying to invest in a specific Treasury Bill issue.

The following are listed by the Central Bank of Kenya as persons who may invest in Treasury Bills:

  1. Resident or non-resident individuals and/or corporate bodies who hold an account with a local commercial bank.
  2. Resident or non-resident individuals and/or corporate bodies who may not have an account with a local commercial bank but invests as a nominee of a commercial bank or investment bank in Kenya.
  3. Resident or non-resident individual and/or corporate bodies that have a CDS Account with Central Bank of Kenya.

Please however note that a non-Kenyan investor who is NOT domiciled in Kenya can invest in Kenya Government Treasury bills as a NOMINEE of a local commercial bank or investment bank. Non-Kenyan investors domiciled in Kenya can however invest directly by opening a CDS account at Central Bank of Kenya (CBK).

C.  What are the features of Treasury Bills?

The following are the top features of a Treasury Bill in Kenya:

  1. It offers secure investment as it is issued by the Government of Kenya
  2. It offers liquidity. In the case you require part/whole of your capital investment, you can sell the bond to other investors.
  3. It is offered for a shorter tenure period that is for either 91,182 or 364 days.
  4. It offers Guaranteed earnings. The interest rates earned on any Treasury Bills are market determined and paid out upon maturity making them a fixed source of income.

D.   Are Treasury Bills Tradable in the Secondary Market i.e. (the Nairobi Securities Exchange – NSE)?

No. Treasury Bills are not traded at the Nairobi Securities Exchange. However, investors may pledge them as collateral security against credit facilities (loans), and may also be transferred among holders of CDS accounts. CDS Statements are adjusted accordingly to reflect these transactions. Commercial banks also use them as collateral for liquidity management through Repurchase Agreements (Repos) and Intraday Liquidity Facility (ILF). It is however important to note that the non-listed 364-day Treasury bill is tradable Over the Counter (OTC) with transactions processed at the CBK.

E.    What is the minimum amount you can invest in Treasury bills in Kenya?

If you would like to invest in a Treasury Bill in Kenya, the minimum investment amount required is Kshs. 100,000, which must be invested in denominations of Kshs. 50,000.

F.    How Do I Determine my Return on Investment a Treasury Bill?

Investors can use the formula provided by the CBK which is already inputted in the Treasury bills pricing calculator on the Central Bank website.

Treasury bills are sold at discounted price (always lower than unit par value of Ksh 100) and therefore the discount is the only return an investor earns on Treasury bills. The price is computed per Kshs. 100 depending on the interest rate/yield quoted by investor using the following formula:

P= 100 x {1 ÷ [1+ {R/100 x D/365}]


= Price per Kshs. 100 which the investor will pay, = interest rate or yield per annum quoted by the investor and = days to maturity or tenor (91, 182 and later 364 days).

G.  How Do I know which Bills are on Offer at any time?

Each new Treasury Bill offer is advertised in the Daily Nation Newspaper on Fridays and is available on or from the previous auction results available at

Treasury Bills on offer are also available on the Central Bank of Kenya website.

H.   If I Buy a Treasury Bill, Can I Access my Funds before Maturity Date?

Investors who need to redeem their securities before they mature can rediscount those securities as a last resort. The Central Bank will buy the securities back, but do so at a punitive rate to discourage investors from doing this, and recommends that investors hold their securities until maturity if at all possible. This process is known as Rediscounting.

Treasury bills rediscounting avails funds to Treasury bills investors who may wish to recall their investments before maturity. It is a last-resort facility. To rediscount, a Treasury bill, send a written request to the Bank with the following documents: CDS statements, a photocopy of the identity document, pay-in slip. For a company, a letter of incorporation is required. The investor submits a duly filled sale confirmation form.

Treasury Bills are transferred or rediscounted at the Central Bank or in the case of the 364-days Treasury bills, they are traded Over The Counter.

I.     What Happens When my Treasury Bill Matures?

The Central Bank remits electronically the face value of maturing bills directly to the investor’s commercial bank account on the due date. The investor’s CDS account is debited by the same value of the security and statements are sent to the investor reflecting the new position.

Investors may however choose to rollover their securities into a new forthcoming issue and in this case, they have to complete an application form giving rollover instructions and submit the same to the Central Bank before set deadline that has been specified in the results of the preceding auction.

J.    What makes Treasury Bonds an attractive investment for investors?

  1. Security

Treasury Bills are units of government debt, meaning that you are investing in the Kenyan Government which promises security for your investment.

2. Higher returns than bank deposits

Treasury Bonds and Bills typically pay a higher yield (return) than bank deposits of a similar term.

3. Regular Returns

Treasury Bills are short term investments so you are assured to receive your returns within a period of three, six or 12 months.

 4. Flexibility

The Central Bank auctions several different types of Treasury bonds & Bills, enabling investors to find investments that fit their needs.

 5. Auctioned Monthly & Weekly Respectively

Treasury bonds are auctioned every month, providing ample investment opportunities for diverse financial needs. On the other hand, Treasury bills are auctioned each week, providing consistent investment opportunities.

6. Hedge against inflation

With proper Treasury bond or bill selection, you may potentially earn an investment return that keeps pace with or even exceeds the inflation rate.

 7. Access to Loan Facilities

Investors can access a loan facility and use the Bond as collateral.

K.   What are the risks involved when investing in Treasury Bills?

Treasury Bills are considered safe investments however some of the risks involved include:

  1. Interest rate risk

Interest rates and bills prices are inversely related. Should interest rates rise, the price of your bill will tend to fall (and vice versa). The longer the time to maturity of a bond, the greater the interest rate risk.

2. Liquidity risk

This is the risk of having to sell a bill at discounted prices due to the lack of a ready market or buyer.

3. Sovereign risk

Payment of the Treasury bond or bill may be affected by the political and economic events in the country.

L.    What happens when an investor passes away before all of his or her investments mature?

This calls for a Third-Party Claim. If an investor passes away before all of his or her investments mature, third parties can claim that investor’s outstanding securities by submitting documents establishing that they should be the bona fide recipients of the securities.

N/B: If you need more information and a step-by-step guideline or an investment advisory on how to effectively invest in Treasury Bills, do not hesitate to contact me on

“LinkedIn,”, 2023,

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