Kenya test waters with debut mobile treasury bond sale

The National Treasury plans to issue a Sh5 billion bond through the mobile-based platform, M-Akiba, in June after testing waters with Sh150 million pilot sale that was launched yesterday, CS Henry Rotich said.

Rotich said the launch yesterday was “special limited offer” with a minimum investment of Sh3,000 and a return of 10 per cent which is tax-free payable after six months.

The bond offered through M-Pesa and Airtel Money started trading around 11.00am and got bids valued at Sh373, 600 within 15 minutes.

Treasury expects to use the mobile-based bond to mobilise funds for infrastructure development, easing pressure on external borrowing.

“This will not substitute high amounts being done by banks but will add up to the domestic borrowing,” Rotich said during the launch at the Treasury. “We have 23 million registered mobile phone users, multiply by 3,000, it gives you Sh69 billion. Of course not everybody will participate but it’s a good indication.”

The bond, traded only on mobile phones, opens a new channel for investors with small amounts of money to lend to the government, as opposed to the current minimum entry point of Sh50,000.

“It gives full access to a risk free infrastructure bond issued by the National Treasury and backed by the financial might of the government,” Rotich said.

This is expected to increase the country’s saving rate currently at a low of between 10 and 12 per cent of the gross domestic product to 30 per cent targeted under the country’s long-term development blueprint, the Vision 2030.

“This product will dramatically change the savings culture and increase products available for saving,” Central Bank of Kenya Governor Patrick Njoroge said.

The bond offers a three percentage points advantage over banks, currently giving interest rates at seven per cent after the capping of interest rates on September last year.

Treasury PS Kamau Thuge said the new platform will help the country diversify funding of infrastructure from Eurobond and syndicated loans.

Nairobi Securities Exchange chairman Samuel Kimani said: “Mobile technology presents a great opportunity to reconstitute the investor profile of the capital market. M-Akiba will adress the issue of low retail participation in our market.”

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