The government wants to take advantage of a nine-month low return on Treasury Bills to float the debut mobile money bond.
The return on a three month Treasury Bill fell to 9.060, the lowest since July last year when the rates went down to 8.2 per cent.
According to Treasury Cabinet Secretary Henry Rotich, this is the ideal time to float the M-Akiba bond that is supposed to bring in wananchi in providing financing options for government.
“Everything is ready; we are just waiting for President Uhuru Kenyatta to launch M-Akiba. The rate will be slightly lower than the prevailing market rate but I will let the President make the announcement when he launches it this month,” Mr Rotich told the Nation at the sidelines of the East African and Southern African accountants general meeting in Nairobi.
The Cabinet secretary said the return will be able to rival what banks pay on deposits, making the Sh5 billion government paper very attractive to investors.
Banks, which have been announcing billions of shillings in full year profits based on interest income have been accused of paying as little as one per cent on deposits while charging just under 30 per cent on loans, making them earn unusually huge margins.
Central Bank Governor Patrick Njoroge has been saying that the prevailing interest spread of 9.7 per cent was “humongous”, compared with Kenya’s peers, South Africa and Nigeria.
BANKS UNDER PRESSURE
With M-Akiba, banks will come under increased competition for deposits as any Kenyan with a mobile phone and with as little as Sh3,000 will be able to invest with the government.
When launched, individuals will be able to start bidding for the five year income tax-free bond.
Investors will, however, be able to bid up to Sh140,000 daily, the maximum cap for mobile money transfers during the week it goes on auction.
The affordable bond was supposed to be introduced in October last year but the government delayed its launch due to high interest rates in the market then.
Kenyans have been eagerly awaiting an opportunity to participate in the government’s risk-free paper that had been out of reach for many, requiring a minimum investment of Sh50,000.