In a bid to boost local investment and fund critical infrastructure projects, the Central Bank of Kenya (CBK) has launched an enticing opportunity for Kenyans to earn tax-free income through infrastructure bonds.
The initiative outlines a simple three-step process to participate, leveraging the digital DhowCSD platform.
With the deadline to review the bond prospectus set for August 13, 2025, now is the time to understand how this financial instrument works and why it matters.
What Are Infrastructure Bonds?
Infrastructure Bonds are a form of government security issued by the Central Bank of Kenya to finance public infrastructure projects.
What makes them particularly appealing to investors is their tax-free status, meaning the interest earned on these bonds is exempt from income tax.
This makes them an excellent option for individuals and institutions seeking stable, predictable returns without the burden of taxation.
The CBK’s latest campaign highlights projects like the expansion of the Port of Lamu under the Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) Corridor and the ongoing development of Bus Rapid Transit (BRT) lines along the Thika Superhighway.
These initiatives, backed by international funding—including $217 million from Japan and $60 million from the U.S. Millennium Challenge Corporation—underscore the government’s commitment to modernising Kenya’s infrastructure.
The Three-Step Process
The process of investing in these bonds has been streamlined, making it accessible to a wider range of investors through the DhowCSD platform and mobile application.
1. Open a DhowCSD Account
Start by downloading the DhowCSD mobile app from the Google Play Store or Apple App Store. Register for a Central Securities Depository (CSD) account, which allows you to invest directly without intermediaries. This aligns with a 2023 World Bank report noting that only 12 per cent of Kenyans participate in formal financial markets due to access barriers—a gap the DhowCSD platform aims to close.
2. Invest in the Infrastructure Bond
Carefully review the prospectus for the two Infrastructure Bonds currently on offer. This document contains crucial details about the bond, including interest rates, maturity dates, and terms. Select the bonds you wish to invest in and submit your bid through DhowCSD. Mark your calendar for the bid and payment deadlines. The deadline for the current offer is before 10:00 a.m. on Wednesday, August 13, 2025 and the deadline for payment is by 2:00 p.m. on Monday, August 18, 2025.
3. Enjoy Tax-Free Income
Once your bid is successful, you will receive semi-annual interest payments. Infrastructure Bonds provide a tax-free income, with interest paid every six months directly to your DhowCSD account. The principal amount you invested will be repaid on the dates outlined in the prospectus, ensuring a full return on your investment at maturity.
Why This Matters Now
The timing of this campaign is strategic. With global economic uncertainty looming, the Kenyan government is tapping into local savings to fund ambitious projects.
The tax-free incentive is particularly appealing amid rising living costs, offering a way for individuals to grow their wealth without losing a chunk to taxes.
Moreover, the DhowCSD platform’s accessibility empowers small investors, a shift praised by financial experts as a step toward financial inclusion.
Things to Consider
Risks: While government bonds are generally secure, the CBK can reject bids, and returns depend on the bond’s fixed interest rate.
Deadline: Act fast—the prospectus review ends on August 13, 2025.
Support: For guidance, contact CBK via their WhatsApp channel or visit centralbank.go.ke.
Whether you’re a seasoned investor or a first-timer, this opportunity could be a game-changer for building tax-free wealth while contributing to Kenya’s growth.
