Kenya today set history by becoming the first country in the world to offer a government bond traded exclusively through a mobile handset.
The M-Akiba bond will debut at the capital markets as a Special Limited offer on 23rd March 2017 with a target of Sh150m. The offer will run for three weeks. This will then be followed by the main M-Akiba offer with a target of Sh4.85 billion sometime in the second or the third quarter of 2017 which will run for three months.
In total, M-Akiba Bond is targeted to raise Sh5 billion from the capital markets.
“Kenya is now the first country in the world to offer her citizens a mobile money payment platform to trade in government bonds,” said Henry Rotich, Treasury’s Cabinet Secretary.
“Through the M-Akiba bond, Kenya has redefined how to increase financial inclusion among the unbanked populace, increase the level of democratization at the bond market by allowing both low income earners and high net worth individuals to trade in government bonds and spur and give momentum to the savings culture.”
The M-Akiba bond will retail at minimum of Sh3, 000 per transaction for a maximum of Sh140, 000 a day. The bond will attract a 10 percent interest paid twice a year -tax free- for a period of three years after which it matures.
M-Akiba bond is targeted at the wider populace but with a focus at the 24 – 39 year olds living in peri -urban and rural areas who have irregular sources of income but who are looking for new avenues to save and invest.
For the first time, the Central Depository and Settlement Corporation (CDSC) will serve as a depository and a registry for a government security.
“This is the dawn of a new era because the registry and the depository is with us. This goes to show the level of faith that the national government has In us and the capacity at CDSC to, going forward, to act as a depository and a registry for a wide range of securities coming the market,” said Rose Mambo
The M-Akiba bond will be traded by any Kenyan citizen with a mobile handset that is registered for mobile money payment services either with Safaricom or Airtel after opening an M-Akiba CDS account by dialing *889#. The initial minimum investment amount per account is Sh3, 000, with consecutive trades in multiples of Sh500.
The M-Akiba mobile traded bond is a collaborative initiative between the National Treasury as the issuer of the bond, the Central Bank of Kenya, as the institution mandated to issue bonds on behalf of Government, the Capital Markets Authority as the capital markets regulator, mobile network operators, namely Safaricom and Airtel as the mobile platform providers for the bond, the Nairobi Securities Exchange where the bond shall be traded and listed, the CDSC, for the registry, depository and settlement of the bond, and members of KASIB who are the trading participants of the NSE.
Kenya Commercial Bank will act as the liquidity providers.