How to Buy Treasury Bonds in Kenya via DhowCSD (Plus Tax-Free Infrastructure Bonds)
Important
Executive Summary:
- Treasury bonds are long-term loans to the government (2 to 30 years) that pay you interest every six months, a steady income stream.
- Infrastructure bonds are the standout: their interest is tax-free, while regular bonds and money market funds pay 10 to 15% withholding tax.
- You buy them on the Central Bank’s DhowCSD from KES 50,000. But your money is locked for years, so keep your emergency fund in a liquid money market fund, not a bond.
If a Treasury bill is a short-term parking spot, a Treasury bond is a long-term income machine. You lend the government money for years, and it pays you interest every six months until maturity. And one type, the infrastructure bond, comes with a perk almost nothing else in Kenya offers: the interest is completely tax-free. Here is how to buy them, and the honest note on when a money market fund is still the better choice.
What a Treasury bond is
A Treasury bond is a longer-term loan to the government, with tenors that run from about 2 years up to 30 years. Unlike a T-bill (which you buy at a discount and cash at maturity), a bond pays you a coupon, a fixed interest payment, usually every six months, right up to maturity, when you also get your capital back. That makes bonds a favourite for people who want a predictable income stream rather than a single lump sum later.
Because they are government-backed, bonds are among the lowest-risk investments in the country. The trade-off, as always, is liquidity: your capital is committed for the long term.
The infrastructure bond superpower: tax-free interest
Here is the detail that makes seasoned investors pay attention. The National Treasury periodically issues infrastructure bonds (IFBs) to fund projects, and their interest is fully tax-exempt. Compare that to the 10 to 15% withholding tax on regular Treasury bonds, and the 15% on money market fund interest, and the appeal is obvious. A tax-free return is worth noticeably more than a taxed one at the same headline rate, which is why infrastructure bonds are often snapped up quickly. (Tax rules can change, so confirm the current treatment before relying on it.)
How to buy a Treasury bond, step by step
- Open a CSD account. Use the Central Bank’s DhowCSD portal (
dhowcsd.centralbank.go.ke) or app, the same account used for T-bills. Individuals can register directly; banks can also act as custodians. - Read the prospectus. Each month’s bond auction comes with a prospectus listing the bonds on offer, their tenors and coupon rates. This is where you check the term and the income you will receive.
- Open the Auctions menu in the Investor Portal and select the bond you want.
- Create a non-competitive bid. For most individuals this is the right choice: you accept the auction’s rate, with a minimum of KES 50,000 (competitive bids, where you name a rate, start at KES 2 million).
- Pay on the settlement date. If your bid succeeds, settle the amount due by the deadline. Then your coupon interest lands in your bank account every six months, and your capital returns at maturity.
The honest part: bonds vs a money market fund
Treasury bonds are excellent for the right money, but they are a poor home for cash you might need soon.
| Treasury Bond | Money Market Fund | |
|---|---|---|
| Term | Years (2 to 30) | None, stay as long as you like |
| Your money is | Locked for the long term | Liquid, usually back within days |
| Income | Coupon every six months | Interest accrues continuously |
| Tax | 10 to 15% (0% for infrastructure bonds) | 15% withholding |
| Best for | Long-term income, tax-free via IFBs | Emergency fund, short-term, flexible money |
The sensible split: keep your emergency fund and short-term savings in a liquid money market fund, and use Treasury bonds, especially tax-free infrastructure bonds, for long-term money you are happy to lock away for the steady, tax-efficient income. An MMF even holds government securities like these on your behalf, so you get a slice of that exposure with full liquidity.
Warning
Do not lock money you might need. A bond’s long term is its weakness as well as its strength. You can sell a bond in the secondary market before maturity, but the price can move against you. Match the tool to the money: emergencies stay liquid, only genuinely long-term cash goes into bonds.
Frequently Asked Questions
How do I buy Treasury bonds in Kenya? Open a CSD account on the Central Bank’s DhowCSD app or portal, read the monthly auction prospectus, then place a non-competitive bid (minimum KES 50,000) on the bond you want. You receive coupon interest every six months and your capital at maturity.
What is an infrastructure bond and why is it special? An infrastructure bond is a government bond issued to fund projects, and its interest is tax-free, unlike regular bonds and money market funds which pay withholding tax. That tax exemption makes its effective return notably higher, so issues often sell out fast.
Are Treasury bonds better than a money market fund? They do different jobs. Bonds suit long-term money and offer steady, sometimes tax-free income, but they lock your capital for years. A money market fund is better for liquid, short-term money and your emergency fund. Many investors use both.
How much do I need to buy a Treasury bond in Kenya? The minimum for a non-competitive bid is KES 50,000 per CSD account per tenor. If that is out of reach, a money market fund gives you exposure to government securities from as little as KES 100, with full liquidity.
Keep reading: compare the short-term option in how to buy Treasury bills, see the whole field in where to put your money, and why an MMF suits your emergency fund in your emergency fund.
Sources: Central Bank of Kenya (DhowCSD and Treasury bonds) and Kenyan financial press (2025–2026). Minimums, coupon rates and tax treatment are set by the authorities and can change; confirm on the DhowCSD portal and the bond prospectus.
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