October 6, 2015
On Monday, September 28, 2015, The National Treasury’s Cabinet Secretary, Henry Rotich, announced the launch of a mobile-enabled platform named M-Akiba for the trading of government-issued fixed income securities by the National Treasury. He said the initiative is to provide an avenue for investing in treasury bonds conveniently through mobile phones. As stated in the Financial Times, Henry Rotich admitted that the retail infrastructure bond would help keep the government’s borrowing costs down as it seeks to raise 220 billion Kenyan shillings this year.
According to the FT, the KSh 5-billion ($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 & save money and pay bills with a few clicks on their phone.
Over the years, 98% uptake in government bonds has been by institutional investors, with only 2% going to individual investors—and this has left out many Kenyans from participating in raising funds for nation building, said Rotich. Recent data from the International Monetary Fund published on Quandl shows that Kenya’s gross national savings and the percentage of GDP are stagnating. The cheap government paper is aimed to enhance a savings culture in Kenya that stands at 11% of the GDP.
There are more than 21 million Kenyans with mobile devices and mobile money accounts, which the government is trying to stimulate to invest in its debt. Kenyans will be able to buy bonds as small as KSh 3,000 ($28.85) as opposed to the previous minimum of KSh 50,000, and trade it on the secondary market from anywhere. The goal of the platform is to create a convenient and cheap way for the government to raise the money from the public. Kenyans will not have to visit central bank offices/brokers or fill out a countless number of papers anymore.
The government needs to raise money through its government bond program and on the other hand, they are also looking at financial inclusion and trying to see how they can get Kenyans to invest and save more, said Rose Mambo, Chief Executive, Central Depository and Settlement Corporation (CDSC).