Lending to the government

When you buy a government security, you're lending money to the government of Tanzania for a fixed period. In return, it pays you interest and repays the amount you lent (the principal) when the security matures.

Treasury bills

Treasury bills are short-term (typically up to 364 days) and are usually sold at a discount to their face value — you buy below face value and receive the full face value at maturity, with the difference being your return.

Treasury bonds

Treasury bonds have longer maturities (commonly 2, 5, 7, 10, 15, 20, or 25 years in Tanzania) and pay a fixed periodic interest payment called a coupon, in addition to repaying the principal at maturity.

Why investors buy them

Government securities are considered lower-risk than shares because the government is a highly reliable borrower, and returns (coupon and principal) are predictable if held to maturity. They typically offer lower long-term returns than stocks in exchange for that stability.

Where they fit in a portfolio

Many investors use bonds to balance the volatility of stocks, provide predictable income, and preserve capital for near-term goals.