The bond will be open from October 16.
The solution, known as M-Akiba, will be delivered in partnership with Safaricom’s M-PESA to continue a push that seeks to deepen access for retail bond trading, which was previously only accessible to commercial banks or traders.
The Treasury has lowered the cost of government bonds from Sh50,000 to Sh3,000 and through this mobile-phone based M-Akiba solution; trades can reach an upper limit of Sh140,000 per day until the bond offering period closes.
“In three weeks over 23 million Kenyans will have the potential to participate in a Sh5 billion Government Infrastructure Bond. This historical development is testament of our commitment to embrace innovation to democratize the uptake of government securities,” National Treasury Cabinet Secretary Henry Rotich said.
“Over the years, 98 percent uptake in government bonds has been by institutional investors, with only two percent going to individual investors- and this has left out many Kenyans from participating in raising funds for nation building,” he added.
To invest in the upcoming Sh5 billion which has been dubbed “Save Money, Make Money, Build Kenya” bond, potential customers will only need to have a valid ID, dial *889# and follow the prompts.
Upon maturity of the bond, the principle amount and coupons (interest from the bond) that will be paid through M-PESA.
Previously, it took an average of two days to buy a government bond in a process that required customers to apply for a Bond CDS Account, take forms to Central Bank of Kenya, and deposit funds with a broker. M-Akiba however makes the process instantaneous.
“This development signals the continuing transformation that mobile money can deliver to boost efficiency in government revenue collection while providing more access for Kenyans. M-Akiba is yet another innovative application that will help more people save and invest, while making it faster for the government to raise funds,” said Stephen Chege, Director – Corporate Affairs, Safaricom.
He noted the need to enhance the savings culture among Kenyans adding that currently, only 11percent of Kenyans save on a regular basis as compared to 22percent in Rwanda and Uganda, while in Qatar this figure stands at 60percent.