by Desmond Kadam’manja- Business and Finance Writer
A bond is a debt investment in which an investor loans a certain amount of money, for a certain amount of time, with a certain interest rate, to a company or country. A government bond is a bond issued by a national government denominated in the country’s own currency.-Wikipedia
In Malawi Government bonds are issued on the Primary market by the Reserve Bank of Malawi, on behalf of the government, and they can also be purchased on the Secondary market from stock brokers.
In Malawi they say that the people do not have a saving culture, but with the raw deals the banks give us I do not blame them, but I believe that Government Bonds offer the best option for Malawians who do want to save and invest money at the same time.
I recommend bonds for the following reasons;
â˘ Bonds are risk free; the Government will always redeem them at the time of maturity.
â˘ Bonds have good interest rates; unlike the saving accounts of banks, the rates on bonds can be as high as 25% each year.
â˘ Bonds are especially a good investment for those who are looking to save money for their children, because the time they take to mature is from over one year to ten years depending on your preference.
â˘ Bonds also provide the Government with much needed funds for development projects.
I believe the Malawi government should really expand the bond market, so that not only will more Malawians be encouraged to save but it would give them extra funds to work with and lessen our dependence on donors.
One way I really want the bonds to be expanded is by the introduction of municipal bonds.
A municipal bond is a bond issued by a city or other local government, or their agencies. Potential issuers of municipal bonds includes cities, counties, redevelopment agencies, districts, school, public utility districts, publicly owned airports and seaports, and any other governmental entity (or group of governments) below the state level. -Wikipedia
These types of bonds will really help our local governments in their development efforts because this would give our cities and districts extra funds for building of roads, schools, hospitals and the provision of other public services.
They would also help in the decentralization process because if a city or district has a means of finding funds on its own, then it would be able to make decisions its own about which development projects to undertake and not have to wait for the Government âs approval or Government funding.
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