M-Akiba, the infrastructure bond via mobile money, will finally be launched on Thursday 23rd March, 2017
After waiting for close to two years now the mobile-traded government security, M-Akiba, will launch on Thursday 23rd March, 2017. The launch event will commence at 12:00 noon at the National Treasury and it will be officiated by Mr. Henry Rotich, CS National Treasury. It is worth noting that the launch will be a special limited offer.
The key stakeholders that will be present at the launch event are namely:
- Central Bank of Kenya (CBK)
- Capital Markets Authority (CMA)
- Nairobi Securities Exchange (NSE)
- Central Depository and Settlement Corporation (CDSC)
- Kenya Association of Stockbrokers
- Investment Banks
- Airtel Kenya
- Safaricom Limited
As it can be noted, only two mobile operators are on-board in this pilot phase namely Safaricom Limited and Airtel Kenya. M-Akiba is a 3 year fixed coupon retail infrastructure bond.
Through M-Akiba, the Government will be seeking to borrow Ksh.150 million in this pilot phase. Individuals are allowed to lend from as little as Ksh.3,000 by means of mobile phone money transfer service contrary to the current minimum of Ksh.50,000.
The government said key motivations for the M-Akiba bond were to boost public savings and participation in the capital markets. Akiba means savings in Swahili. Retail participation in the Kenyan bond market is only 2 percent, while the national savings rate is 11 percent of Gross Domestic Product (GDP) – half that of neighbouring Uganda and Rwanda.
The idea was first made public in parliament on June 11, 2015 by Mr.Rotich but it failed to take off in October 2015 as planned due to volatile interest rates, which had risen to 22 percent for short-term government papers. In January 2016, the government had put March as the deadline but it also failed to introduce the bond. The government went ahead to set new launch dates in June then July but failed to honour any of them.
How M-Akiba will work
- Registration, trading and settlement will solely be done through your handset unlike previously where people looking to buy bonds had to get accounts with Central Bank of Kenya.
- To register, you will only need to dial *889# and follow the prompts.
- Interests earned will be paid out every 6 months.
- The final interest payment will be lumped together with the principal that you invested, providing you with a guaranteed and more profit than what you would get from your bank. The sum will directly be credited to your mobile wallet.
- The current daily limit that you can bid is set at 140,000 during the auction week. This is so because of the imposed daily maximum cap for mobile money transfers.
- Investors, who miss out on the bond in the primary issue will have the option of buying it in the secondary market at the NSE. However, purchase of the bond in the secondary market will be determined by market forces.
As a bonus the M-Akiba bond is an infrastructure bond and currently, all infrastructural bonds are tax-free.
“Save money. Make money. Build Kenya.” is the slogan M-Akiba bond goes by.