Fate of M-Akiba in the balance

Treasury Secretary Henry Rotich. The Treasury is yet to settle on a date for introducing the much-awaited mobile phone-based bond named M-Akiba. FILE PHOTO | DIANA NGILA |

What you need to know:

  • The State paper targets cheap borrowing by expanding subscription from traditional institutional investors.
  • The Treasury initially planned to start selling the Sh5 billion five-year bond in October but interest rates had risen to 22 per cent for short-term government paper.

The National Treasury is yet to settle on a date for introducing the much-awaited mobile phone-based bond named M-Akiba four months after it was supposed to be launched.

President Uhuru Kenyatta last year signed a law guiding the sale of the Sh5 billion mini-securities but the Treasury has failed to issue the low-denomination bond targeting the common man, at one point citing interest rates.

“We will give a date shortly once a few issues are sorted,” Treasury Secretary Henry Rotich said Monday without elaborating in response to our queries.

The government in January said it would introduce the bond by the end of March after the planned sale in October last year was derailed by the volatile interest rates.

The State paper targets cheap borrowing by expanding subscription from traditional institutional investors.

M-Akiba will be sold at minimum denominations of Sh3,000 through mobile money platforms.

Individuals can bid a maximum of Sh140,000 for the income tax-free bond. Potential investors will only need a mobile phone line and subscription to a mobile money transfer service, which will enable telcos to open an electronic account with the CDSC on their behalf.

The Treasury is supposed to pay the coupons every six months through the same platforms.

The Treasury initially planned to start selling the Sh5 billion five-year bond in October but interest rates had risen to 22 per cent for short-term government paper.

Kenyans have been eagerly awaiting an opportunity to participate in the ‘risk-free’ issue that is out of reach for many with its minimum investment requirement of Sh50,000.

Banks and statutory bodies in Kenya take up most of government and corporate debt, meaning that the level of individual investment is limited.

Mobile platforms will potentially see over 23 million Kenyans participate in the bond. Individuals will also enjoy instantaneous purchase of government bonds as opposed to the previous two-day process.

The Nairobi Securities Exchange (NSE) earlier said it was ready to introduce the bond and was only waiting for the Treasury to give it the green light.

“We are just continuing with simulation and testing so that once we are given the nod to come to market, we will be ready for it,” NSE chief executive Geoffrey Odundo was quoted saying in June this year.

The bond was the brainchild of the NSE, stockbrokers, the Capital Markets Authority, investment banks and the Central Depository and Settlement Corporation.