Purchase price and net return on a Treasury bill.
Net return
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Purchase price
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Gross interest
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WHT (15%)
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Buying below face value
A Treasury bill is the simplest instrument the government issues, and the mechanics are easy once you see them. You do not buy a bill at its face value and collect interest along the way. Instead you pay less than the face value up front, and at maturity the Central Bank pays you the full face value back. The difference between what you paid and what you receive is your return. There are no coupon cheques in between, just one discounted price now and one round number at the end. This calculator works out that discounted purchase price, the gross return baked into it, and what you keep after tax.
Three tenors are on offer in Kenya: 91, 182, and 364 days, and the usual minimum is KES 100,000. Bills suit money you want to park safely for under a year, an emergency buffer, a deposit you will need in a few months, or business cash between obligations. The rate is set at auction and moves with demand, so the percentage you enter should be the one quoted for the tenor you are bidding on, which you can check against the Central Bank of Kenya auction results.
Where the 15 percent withholding bites
The return on a Treasury bill is interest, and interest is taxed. The Central Bank deducts withholding tax on the gain before it reaches you, at the rate this calculator applies, currently 15 percent. That deduction happens automatically, so the net return shown here is what actually lands, not a figure you have to chase later. For most individual investors this withholding is the final tax on the interest, which is part of what makes bills tidy to hold. As always with Kenyan rates, confirm the current withholding percentage with the Kenya Revenue Authority, since these figures have moved before.
A one-year bill at 15 percent
Say you buy a 364-day bill with a face value of KES 1 million at a quoted rate of 15 percent. The calculator works the interest as a simple proportion of the year, KES 1,000,000 times 15 percent times 364 over 365, which gives roughly KES 149,589. Withholding tax of 15 percent on that interest is about KES 22,438, leaving a net return near KES 127,151. Because the bill is discounted, you pay only about KES 850,411 today and receive the full KES 1 million at maturity. The steps below use the rates this calculator applies.
| Step | Amount (KES) |
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The chart lays the purchase price against the face value, with the gross interest as the gap and the slice that tax takes from it.
One honest caveat on the arithmetic. This tool uses a clean simple-interest discount so the maths is transparent. The actual auction price is set on a specific day-count and yield convention, so the price you are debited can differ by a small margin from the figure here. Use this as a close estimate, then settle on the Central Bank's quoted price for the bid.
Rolling over, and the rate you actually lock
A point that trips up new investors: the rate quoted on a bill is locked for that tenor, but it is not an annual income you keep receiving. A 91-day bill matures in three months, and to stay invested you have to roll the proceeds into a fresh bill at whatever rate is on offer then, which may be higher or lower. So a tempting 91-day rate is not a guaranteed annual return; it is a quarter of a year at that rate, after which you are back at the auction. If you want to fix a known return for longer, a longer tenor or a bond may fit better. The flip side is flexibility: short bills let you reprice quickly if rates are climbing, which a long fixed holding cannot.
Quick answers
Can I sell a Treasury bill before it matures?
Yes, bills can be sold in the secondary market before maturity, but the price you get depends on prevailing rates and is not guaranteed to equal what you paid plus accrued interest. If rates have risen since you bought, an early sale can mean a smaller gain or even a small loss. Bills are best treated as held-to-maturity instruments unless you specifically need the cash early.
How is a bill different from a bond?
A bill is short term, up to a year, and pays nothing until maturity because the return is the discount. A bond is longer term and pays a fixed coupon, usually twice a year, on its face value. If you want regular income, a bond suits; if you want a safe short parking spot, a bill does.
Do I need a CDS account to invest?
Yes. Buying government securities in Kenya runs through a Central Depository System account held with the Central Bank, which is where the bills are recorded and where maturity proceeds are paid. Setting that up is a one-time step before your first bid.