Kenya began trading its debut phone based bond at the Nairobi Securities Exchange (NSE) on Tuesday.
The Kenyan government made an initial offer of the three year bond dubbed M Akiba (Swahili for mobile savings) worth 150 Million shillings or 1.5 Million US Dollars.
In a world first, trading of the securities will be done exclusively on the mobile phone using Kenya’s innovative mobile money platform allowing those without bank account to participate.
The government security, which is offered exclusively through the mobile phone was open to the public for three weeks but sold out in 13 days.
Investors could buy bonds for as low as 3,000 shillings or $30, while about 108,000 people registered on the platform, just over 5,200 bought the securities.
CEO of Central Depository & Settlement Corporation (CDSC) Rose Mambo says up to 75,000 were taken by people investing between 3,000 and 20,000 shillings, and then the remaining 25,000 was taken up by people investing above 20,000.
“I think the highest investor we had invested about 1.2million shillings.”
Without the need of a bank account and with about 73% of Kenyans subscribed on mobile money platforms, the Kenyan government is betting on the innovative technology for the success of the main offering of 4.85 Billion Shillings or 485 Million US dollars set for June this year.
Until now the minimum investment for government bonds has been 50,000 shillings or $500.
Wohoro Ndoho an Official for Public Debt Management, in Kenya says that through the simple but very powerful technology of their mobile phones, they will be able to participate in buying an instrument that has up to now been an exclusive preserve of the big banks and big investors.
Investors will earn 10% interest rates paid twice yearly, which is higher than the 7% currently being offered by commercial banks.
CEO of Nairobi Securities Exchange George Oundo says that with their current saving levels of slightly less than 12% to GDP, there was something that they had to do differently and he thinks this is the disruption they have been waiting for.
M Akiba is expected to offer the Kenyan government cheaper loans spread over a longer period of time.
President Kenyatta has previously defended his government’s heavy borrowing saying it is meant for infrastructure development.
– By Sarah Kimani
