More T-bills buyers brought into the fold

Dar es Salaam. The Bank of Tanzania (BoT) has introduced a new arrangement that will accommodate more small investors in auctions of government securities.

The system called non-competitive bidding is a method where investors agree to buy a specified number of securities at the weighted average price of the competitive bid, according to a statement by the central bank yesterday.

Treasury bills and bonds are debt instruments issued by the government in exchange for lending it money. While treasury bills mature in less than a year, treasury bonds range between two and 15 years.

Last week, President John Pombe Magufuli challenged financial institutions to reach more ordinary Tanzanians and do business with them. He said currently commercial banks and pensions funds were the main buyers of the government securities and “it looks like the government is doing business with its money alone”.

However, the director of financial markets at BoT, Mr Alexander Ng’winamila, said the arrangement which was effected since December 7, 2015 was planned even before Dr Magufuli’s remarks.

“Our main objective is to widen participation by accommodating investors in the primary and secondary markets for government securities,” he said.

“This is a good initiative aimed to involve the general public and also widen the threshold of investor participation as compare to previous auctions.”

According to him, the non-competitive bidding will also allow people who are not sophisticated with the transactions.

The statement said that participation will be open to all Tanzanian residents or as the bank may prescribe from time to time and that investors will submit bids through the Central Depository Participants (CDPs). Investors will be allowed to make a single bid of a minimum amount of Sh500,000 for the Treasury bills and Sh1 million for the Treasury bonds per bid; and a maximum of Sh50 million per bid per maturity.