EcoCash has partnered a Untu-Capital a local micro finance company. The partnership will allow members of the public to purchase bonds from the Financial Securities Exchange using Ecocash.
What is a bond?
Is a legal document (could also be in electronic format) that is issued by a company in exchange for money say $100 i.e. a debt instrument. The person to whom the bond is given is known as a bond holder. At the end of an agreed period the bond holder is entitled to received an agreed amount in interest plus the initial amount they invested i.e the $100 in this example.
Bonds are a legal equivalent of Chimbadzo
We all know who who or what Ecocash is we use it everyday in fact during the last quarter of 2017 close to 90% of transactions were in the form of Ecocash. It commands 99.98% of the mobile market. But what and who are Untu-Capital and what is the Financial Securities Exchange. Previsiously you could buy U-Gain bonds using Telecash but as you can guess people don’t really care much for Telecash.
Untu-Capital and the U-Gain bond
Untu-capital is a local micro-finance company. In this instance they are trying to raise about $1 million in capital which they will use to loan to start ups. To raise this amount they issued a type of a bond known as U-Gain.
U-Gain bonds can be bought and sold on the Financial Securities Exchange which is a money market. You can invest as little as $50 unlike traditional bonds sold on the Zimbabwe Stock Exchange which typically requires large sums of investment to obtain meaningful returns.
Returns on the U-Gain bond
The U-Gain bond as already pointed involves you investing as little as $50. The amount invested will earn an interest of 9% per annum i.e. every 12 months . If you invest $100 you will receive $9 interest plus the initial $100. Now this does not seem like much but contrast this with your bank account. If I was to leave $100 in my account I would have $40 when the year ends due to bank charges!
Bonds are a safe form investment hence the relatively low rate. Investments with higher returns tend to be riskier than this.
Financial Securities Exchange (Private) Limited (FINSEC) is licensed by the Securities and Exchange Commission of Zimbabwe as a Securities Exchange. They are relatively new but their focus on fintech is set to revolutionize the Capital Markets.