The National Treasury on April 1 launched its Republic of South Africa (RSA) Retail Savings Bonds Top-Up facility, offering applicants and savings groups the ability to invest with an opening balance of R500 and top-ups of no less than R100.

Debt issuance and management director Terry Msomi says the RSA Savings Bonds Top-Up facility enables informal groups, like stokvels and other types of investment social clubs, to invest with no cost attached.

“We have heard, over the years, too many stories of monies going missing, or people being robbed of large sums of stokvel monies.

“We have heard . . . how some of these stokvels have trouble accessing savings products from private banks and some of the institutions that are out in the market,” he adds.

With the launch, Msomi says Treasury is hopeful the product provides individual and group savers with a “safe and lucrative” way to invest their monies.

The bond is open to individuals and groups, matures in three years and is interest-capitalised. It offers non-tradable bonds and is not listed on any stock exchange, as well as having no fees. Interest payments are only made in rands and accessible only from banks accounts in South Africa.

National Treasury liability management acting chief director Wanga Cibi explains that investors can invest by sending an application form through fax, email or post; alternatively, they can register and apply online at any post office in South Africa.

“The available product options are limited to fixed-rate RSA retail savings bonds and inflation-linked RSA savings bonds,” she says.

In February, the RSA Retail Savings Bond unit instituted a couple of changes to these products, such as removing the limit of R5-million a product and allowed for monthly interest options of fixed-rate South African retail savings bonds.

“Since inception in 2004, the RSA Retail Savings Bonds has raised over R25-billion, with an outstanding amount of about R9-billion from 53 000 active investments,” says Cibi.

The majority of RSA Retail Savings Bonds investors are aged 50 years and older. “This may be attributed to investors saving retirement funds, and therefore benefiting from monthly interest payments,” she says.

“[Owing] to public demand, and to attract younger investors, the retail bonds team went back to the drawing board and thought long and hard about how this could be done. The outcome is the creation of a top-up retail savings bond,” explains Cibi.

She says the new product will enable investors to start investing with smaller amounts than previously possible, while being able to top up the same investment at any time during the life of the investment.