The Bank of Namibia has postponed the launch of retail bonds in the country to 2027, citing technical capacity as a hindrance.
Last year the bank said retail bonds would launch in 2026.
Retail bonds are a form of a loan to a company or the government. When individuals buy a retail bond, they are lending to the government through the central bank.
Central bank governor Ebson Uanguta during yesterday’s repo announcement said the bank needs to develop a system, which is a challenge because external capacity is required.
“We are working on it but these things take longer because you need to put up a system. I wish the central bank had the capacity to quickly put up the system but our expertise is in other areas,” Uanguta said.
He added that the bank also faced challenges in terms of competitiveness in the area of the bonds.
He, however, said by 2027 the bank will launch the bonds and people should continue saving money for when the instruments are issued.
“I believe by next year around this time, we should be able to say bring your money to put it into these instruments,” Uanguta said.
The bonds cater to individuals who ordinarily cannot afford the minimum N$10 000 required to buy treasury bills, or the N$50 000 required to buy fixed-income bonds.
In South Africa, a retail bond can be bought for as little as N$1 000 and carries no commission, agency, or service fees.
When you purchase a retail bond, you are lending to the government through the Bank of Namibia for a specified period.
In return, the government promises to pay you regular interest payments, known as coupons.
These coupons can be paid annually, semi-annually, or at other intervals, depending on the bond’s terms.
In Namibia, all government bonds pay coupons semi-annually.
Retail bonds are considered risk-free as the government is legally obligated to honour the debt.
The central bank decided to keep the repo rate unchanged at 6.50%. This leaves the prime rate at 10.00%.
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