The mobile-traded government security, M-Akiba, to be launched in October, 2016 after multiple botched attempts

Mr. Felix
9 years ago
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After waiting for close to a year now the mobile-traded government security, M-Akiba, will launch in a month’s time, that is, October 2016. According to the Business Daily the following is what Mr.Rotich, the Treasury CS, had to say about when possibly we should expect M-Akiba to be launched;

“Once they are ready we will set the launching date. I understand they need about two weeks for primary dealership infrastructure and another two weeks for secondary trading infrastructure.”

By they he refers to the Nairobi Securities Exchange (NSE), the Central Depository and Settlement Corporation (CDSC), the Central Bank of Kenya (CBK) and mobile service providers who will operate M-Akiba.

Through M-Akiba, the Government will be seeking to borrow Ksh.5 billion. 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 per cent, while the national savings rate is 11 per cent of gross domestic product – 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 last year as planned due to volatile interest rates, which had risen to 22 per cent for short-term government papers. In January this year, 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.