The solution, known as M-Akiba, will be delivered in partnership with mobile phone firm 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.
“In three weeks, over 23 million Kenyans will have the potential to participate in a 48 million U.S. dollars Government Infrastructure Bond. This historical development is testament of our commitment to embrace innovation to democratize the uptake of government securities,” National Treasury Cabinet Secretary Henry Rotich said.
As part of this effort, the Treasury recently lowered the cost of government bonds from 478 dollars to just 29 dollars.
Through the mobile-phone based M-Kiba solution, trades can reach an upper limit of 1,350 dollars per day until the bond offering period closes.
“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,” Rotich said.
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.
Safaricom’s Director for Corporate Affairs Stephen Chege said the latest 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,” Chege said.
Chege said there is genuine need to enhancing the savings culture among Kenyans, noting that only 11 percent of Kenyans currently save on a regular basis as compared to 22 percent in Rwanda and Uganda, while in Qatar this figure stands at 60 percent.
To invest in the upcoming 48 million dollars 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, a mobile money transfer service. Enditem