The government intends to create a ”lot of pressure” within the private banking sector by forcing it match the savings interest rates of the newly launched RSA Retail Bond launched on Friday in Pretoria, Finance Minister Trevor Manuel said.
Introducing the RSA Retail Bond’s interest rate, the head of Asset and Management Liabilities at the Treasury, Phakamani Hadebe, declared that a two-year bond will have returns of 9,25%, a three-year bond 9,5% and the five-year bond will reward investors with a 10% return.
”These are the best rates in South Africa. If you get anything better than this you can tell us,” he said.
A statement by the Treasury declared that ”returns in the government bond market have outperformed the rest of the market for the past 10 years”.
The public has the option to purchase one of the three bond types or create a combination for a minimum of R1 000, the Treasury said.
The interest rates on an RSA Retail Bond will be priced off the government bond yield curve, said Hadebe, explaining it will only be adjusted if the rates move by more than 50 basis points during a month.
The bond, the seventh in the government’s stable, targets an estimated 11-million South Africans who would not normally be potential investors.
By removing all costs and making the bond a ”simple and secure investment”, the government hopes to create an awareness among the general public to save.
”Personal savings in South Africa is pretty low by international standards, the exact opposite of Japan,” said Department of Finance Director General Lesetja Kganyago. — Sapa