You're lending the government money so it can develop infrastructure. The government pays you interest.

I think you're being lazy. Make some effort to find out before asking specific questions when you cant figure something out. There;s also another thread running on this subject.

@The deal,
I read your article on "3 Kenyan Stocks Whose Dividend Yields are Higher than your Average Rental Yield" and noted that the highest return for both option is 11.9%
What i wonder then is why do people bother so much with this kind of investments when you can give the money to the government (Infrastructure bond) sit back and do nothing while earning 20% risk free.
Is there any sense in these investments that keep us running up and down everyday?

Patcho,

Let me see if I can introduce the concept in a simple manner...

Ideally, an infrastructure bond is issued by local authorities and/or central government to obtain funds for a particular infrastructure such as a road (e.g. Thika Road).

Once the infrastructure has been completed, any revenue earned on that project would be used to maintain the infrastructure and pay both interest and principal on the bond.

In Kenya, the issue is that the government, in this case, will not be able to get any revenue from the proposed infrastructure such that is being financed. Not unless, they decide to unilaterally establish and run toll stations on Thika Road.

Hence, the government would then undertake to cater for the interest and principal payment thereby making relegating this bond to be like a treasury bond.

The difference is that we know how the funds are to be spent in an infrastructure bond while we don't for a treasury bond other than to finance government operations.

Hope this helps.

Regards