How To Calculate Treasury Bill In Ghana
What is a treasury bill in Ghana? Treasury Bills (T-Bills) are investment instruments issued by Bank of Ghana (BOG) on behalf of the Government of Ghana. This is used by governments to borrow short-term funds from citizens for developmental purposes.
What are the requirements needed for investing in a treasury bill in Ghana?
. A Valid Identification:
You must provide a valid government-issued photo ID. This is a mandatory requirement for verification.
Ghana Card (ECOWAS Identity Card)
Passport
Driver’s License
Voter’s ID
A Bank Account:
While some investment firms may not require a bank account for the initial purchase, you will need one for the funds to be paid into upon maturity. Most commercial banks and investment firms require you to have a bank account with them to facilitate the investment.
A Central Securities Depository (CSD) Account:
For first-time investors, your financial institution will set up a CSD account for you. The CSD is a central platform for all government securities, and your treasury bill investment will be held here. The CSD client ID is unique to you and is used to track all your investments in government securities.
Minimum Investment Amount:
The minimum amount required to purchase a treasury bill is GHS 100. This makes it an accessible investment for many people.
While some investment firms may not require a bank account for the initial purchase, you will need one for the funds to be paid into upon maturity. Most commercial banks and investment firms require you to have a bank account with them to facilitate the investment.
The amount you wish to invest.
The tenor (e.g., 91-day, 182-day, or 364-day).
Your instructions for the investment upon maturity (e.g., re-invest with interest, re-invest principal only, or pay out the full amount).
While some investment firms may not require a bank account for the initial purchase, you will need one for the funds to be paid into upon maturity. Most commercial banks and investment firms require you to have a bank account with them to facilitate the investment.
How to invest in a treasury bill in Ghana?
Step 1: Choose a Primary Dealer
Treasury bills are not sold directly to the public by the Bank of Ghana. You must purchase them through a licensed Primary Dealer. These are typically:
Commercial Banks: All major banks in Ghana (e.g., GCB Bank, CalBank, Ecobank, GTBank, Fidelity Bank) are primary dealers.
Licensed Investment Firms: Reputable firms like Databank and others also act as primary dealers.
Step 2: Fulfill the Requirements
Before you can invest, you need to meet a few key requirements:
Valid ID: You will need a valid government-issued photo ID such as a Ghana Card, passport, or driver’s license.
Bank Account: While not always required for the initial application, you will need a bank account to receive your funds upon maturity. Many primary dealers require you to have an account with them to make the process smoother.
Central Securities Depository (CSD) Account:
The CSD is a central platform for all government securities. Your bank or investment firm will help you open a CSD account, which is where your investment will be electronically held.
Step 3:
Make Your Investment
You have two main ways to invest:
Option 1:
In-Person at a Bank or Investment Firm
Visit a Branch: Go to a branch of your chosen primary dealer.
Request a T-Bill Application Form: Inform the customer service representative that you want to invest in a treasury bill.
Complete the Form: Fill out the application form. You will need to specify:
Investment Amount: The minimum investment is as little as GHS 100.
Tenor: Choose the duration of your investment (e.g., 91-day, 182-day, or 364-day).
Maturity Instructions: Indicate what you want to happen when your investment matures. Your options are usually:
Roll Over: Reinvest the principal and interest.
Re-invest Principal: Reinvest only the original amount and have the interest paid to you.
Pay Out: Have the full amount (principal and interest) paid to your bank account.
Make Payment: Pay the investment amount in cash or through a bank transfer.
Option 2: Using a Mobile or Online Platform
Many banks and investment firms now offer convenient digital channels to invest in T-Bills.
Mobile Money:
Some banks, such as Ecobank (with its TBill4All service), allow you to purchase T-Bills directly from your mobile money wallet. This is a very popular and easy method.
Banking Apps:
Several banks, including GTBank and Fidelity Bank, have integrated T-Bill purchase features into their mobile banking apps, allowing you to invest from the comfort of your home.
How To Calculate Treasury Bill In Ghana?
To calculate your returns, you need three main variables:
Face Value:
This is the nominal value of the T-Bill, which is the amount you will receive at maturity. For simplicity, it’s often represented as GHS 100.
Discount Rate:
This is the interest rate you’ll earn. It’s determined at the weekly auction by the Bank of Ghana and is expressed as a percentage.
Tenor:
The duration of the T-Bill, which is the number of days until it matures (e.g., 91-day, 182-day, or 364-day).
Calculate the Purchase Price
The first step is to calculate the price you will pay for the T-Bill. This price is the face value minus the interest you will earn, which is a key part of the “discount” calculation.
The formula for the purchase price is:
$$ Purchase\ Price = Face\ Value * [1 – (Discount\ Rate * \frac{Tenor}{365})]$$
Example: Let’s say you want to invest GHS 1,000 for a 91-day T-Bill with an annual discount rate of 25%.
Face Value: GHS 1,000
Discount Rate: 25% or 0.25
Tenor: 91 days
Purchase Price=1000∗[1−(0.25∗
365
91
​
Purchase Price=1000∗[1−(0.062328)]
Purchase Price=1000∗0.937672
Purchase Price≈ GHS 937.67
This means you pay GHS 937.67 for the T-Bill.
Calculate Your Returns at Maturity
Your return on investment is the difference between the face value and the purchase price.
Total Return=Face Value−Purchase Price
Using the example above:
Total Return=GHS 1000−GHS 937.67
Total Return≈ GHS 62.33
At the end of 91 days, you will receive GHS 1,000, which includes your initial investment of GHS 937.67 and your profit of GHS 62.33.
Thank you for visiting GHResults.com — we wish you all the best on your journey ahead, and we look forward to welcoming you back soon!