The Treasury has announced plans to float the first-ever Government Bond that will be offered exclusively via mobile phone, pointing to the growing relevance of mobile money solutions in the evolving payments space.
The solution, known as M-Akiba, will be delivered in partnership with Safaricom’s M-PESA to continue a push that seeks to deepen access for retail bond trading, which was previously only accessible to commercial banks or traders.
As part of this effort, the Treasury recently lowered the cost of government bonds from Kshs. 50,000 to just Kshs. 3,000. Through the mobile-phone based M-Kiba solution, trades can reach an upper limit of Kshs. 140,000 per day until the bond offering period closes.
“In three weeks over 23 million Kenyans will have the potential to participate in a Kshs. 5 billion Government Infrastructure Bond. This historical development is testament of our commitment to embrace innovation to democratize the uptake of government securities,” said Henry Rotich, Cabinet Secretary, National Treasury.
He said, “Over the years, 98 percent uptake in government bonds has been by institutional investors, with only two percent going to individual investors- and this has left out many Kenyans from participating in raising funds for nation building”.
Previously, it took an average of two days to buy a government bond in a process that required customers to apply for a Bond CDS Account, take forms to Central Bank of Kenya, and deposit funds with a broker. M-Akiba however makes the process instantaneous.
“This development signals the continuing transformation that mobile money can deliver to boost efficiency in government revenue collection while providing more access for Kenyans. M-Akiba is yet another innovative application that will help more people save and invest, while making it faster for the government to raise funds,” said Stephen Chege, Director – Corporate Affairs, Safaricom.
He added, “There is genuine need to enhancing the savings culture among Kenyans. Currently, only 11% of Kenyans save on a regular basis as compared to 22% in Rwanda and Uganda, while in Qatar this figure stands at 60%.”
To invest in the upcoming Sh5 billion which has been dubbed “Save Money, Make Money, Build Kenya” bond, potential customers will only need to have a valid ID, dial *889# and follow the prompts. Upon maturity of the bond, the principle amount and coupons (interest from the bond) that will be paid through M-PESA.