Lending to government by phone a first

The recent launch in Nairobi of M-Akiba, the sale of government paper via mobile money, is a veritable national game changer that should not be buried in the din of the daily political noise.

This bold step of allowing Kenyans with as little as Sh3,000 the opportunity to invest their savings by lending to their own government, straight from their mobile phones, is yet another first by Kenya in the world of innovations, following the successful M-Pesa money transfer.

Indeed, while Americans celebrate the creative genius of Microsoft co-founder Bill Gates, Apple co-founder Steve Jobs, Mark Zuckerberg, the co-founder of Facebook, and others, the Japanese and South Koreans laud their advances in robotics and the East Europeans and Russians lead in information technology (IT) security, Kenyans can also stand to be counted as world leaders in mobile money.

Viva Kenya! This innovation is all the more vital due to the rare credibility that comes from the government’s endorsement of mobile money as an integral part of the National Payments System.

LEND TO GOVERNMENT

Thanks to the introduction of M-Akiba, ordinary Kenyans can now lend to their government, at their own convenience, the funds it badly needs to finance what they are asking the same government to do for them, and in the process also make a handsome return from their investment. M-Akiba is, indeed, the beginning of a second fiscal revolution in the country, since the tax collection boom of the Narc government.

It will enable the government to raise substantial funding at much reduced costs in local currency, at all times.

It will dramatically reduce the need for the foreign exchange-denominated debt that has compounded our debt servicing obligations, in addition to stressing the shilling exchange rate.

The opening up of investment in government paper to ordinary Kenyans represents another turning point; the democratisation of opportunity.

GREATEST BENEFICIARY

Currently, the opportunity is largely enjoyed by the financial institutions and other high net-worth investors.

The greatest beneficiary will, after all, be the government itself. By allowing the widest numbers of “lenders” to compete in lending to it, the government will attract savings at much cheaper rates, perhaps even below 10 per cent per annum, thus cutting the current government borrowing cost burden by a wide margin.

Soon, we will begin to ask, and rightly so, why it took us this long to switch to mobile sales of government debt.

I am very happy and indeed, proud to have sponsored the Central Bank of Kenya (Amendment) Bill (2014) that sought to lower the minimum thresholds of Treasury Bonds and to enable trading through the electronic platform.

I thank President Uhuru Kenyatta and the National Treasury, for keeping the promise made in a memorandum to the National Assembly, and in our direct conversations with them some years ago, to administratively effect this great change.

The introduction of M-Akiba is a monumental moment, indeed, a milestone. This is a unique, great and bold national financial venture. A first by our country. Cheers!

Mr Kabando is the MP for Mukurweini and a member of the parliamentary Departmental Committee on Agriculture, Livestock and Co-operatives. [email protected]