Kenya Launches the World’s First Ever Bond Sale via Mobile Phone

Treasury Secretary, Henry Rotich.

Kenya has launched the world’s first Treasury bond to be offered exclusively via mobile phone and slashed the minimum investment level in government debt, in a bid to stimulate public participation in the capital markets, raise money cheaply and boost the national savings rate.

According to Financial Times, the Ks5bn ($48m) five-year retail M-Akiba infrastructure bond is based on Kenya’s innovative M-Pesa mobile money system, which allows mobile phone subscribers to send and save money and pay bills with a few clicks on their phone.

Kenyans will be able to open central bank depository accounts from their phones without visiting a bank or broker, buy government paper for as little as 3,000 shillings ($28) and then trade it on the secondary market from anywhere, according to Treasury Secretary Henry Rotich. Previously they had to register at one of the central bank’s four offices, fill in numerous forms and spend at least Ks50,000.

“M-Akiba is a one-of-a-kind initiative and the first such product anywhere in the world,” Rotich said.

He admitted that the retail infrastructure bond would help keep government borrowing costs down as the government seeks to raise some Ks220bn this year.

“Obviously our strategy is to get cheap sources of funds so we’re looking at all answers for funding,” he said. He further added that the yield on the M-Akiba bond, which will debut in the middle of next month, would be higher than commercial banks’ savings rates but lower than the market rate on government debt.

“Investors buying bonds through M-Akiba can spend as much as 140,000 shillings and can check statements from their phones. Interest will be paid directly to their mobile wallets semi-annually and secondary trading can take place at the Nairobi Securities Exchange,” he continued.

“Over the years, 98% of government bonds are traded by institutional investors and only 2% by individual investors. About 11% of Kenyans save on a regular basis compared with 22% in neighbouring Uganda and Rwanda,” Safaricom said in its statement.

This article first appeared HERE


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