Johannesburg - December sales of the government's retail bond more than doubled when they increased from R17 million to R35 million year on year, according to the national treasury.
The bond was launched by finance minister Trevor Manuel in May 2004 as a way for ordinary South Africans to save money and as an alternative to putting cash into a bank or the stock market. The bond market, also known as the debt market, is less risky than the JSE and the returns are guaranteed.
The national treasury said more than 18 600 people had invested in the retail bond, which can be bought in post offices and even over the phone, with the total amount invested having risen to R1.7 billion.
The issue value of this bond has risen significantly but it represents only about 0.3 percent of the total government debt market, which was calculated at R545 billion in December by the SA Reserve Bank.
Investors into the retail bond can choose to invest over two, three or five years and, depending on the timing, the interest rates offered range from 7.5 percent to 8 percent.
Although retail bonds are common in the UK and other markets, the government's retail bond was the first of its kind until January this year, when Standard Bank launched its first retail bond.
Standard Bank said its listed retail bank deposit would be interest bearing, tradable and available to the general public in the form of a retail deposit note.
It is a three-year bond and is the first of a number of deposit notes that the bank intends to launch. Most banks have shied away from issuing retail bonds because profit margins were not favourable, but Standard Bank said it issued the bond in order to broaden and extend its depositor base.
Erik Larsen, a spokesperson for Standard Bank, said the bond was aimed at a slightly more sophisticated investor than the government's retail bond because the minimum investment in the primary offering was R10 000.
Once the bank's note is listed, it can be traded in R100 denominations. There is no maximum investment amount. During this initial offer stage, which ends on Friday, no fees or charges will be payable.
South Africans have a particularly bad culture of savings. Disposable income tends to be quickly disposed of. But in the past couple of years a few more savings options for lower-income earners have evolved.
Banks launched the low-cost Mzansi accounts, the unit trust industry is coming up with ways for poorer families to save for educational needs and David Shapiro, a consultant at Sasfin Frankel Pollak, launched his 2010 fund last November.
He said tickets for the soccer in 2010 were likely to be R1 000 and more, and people needed to start saving now to be able to buy tickets. To invest, people need to put R5 000 in now and R250 every month, which Shapiro said was out of the reach of many potential investors.
"I'm big on saving, but big institutions are not promoting savings," Shapiro said. "If one of the big money managers launched a savings fund with very low barriers, they'd have to be prepared to take a hit on profits and they don't seem ready to do that."