Kenya re-opens M-Akiba;World’s first mobile government bond

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The Kenyan government has once again gone to the market with its unique mobile phone based bond M-Akiba, as it seeks to raise funds to support infrastructure development in the country.

In a second issue this year, the National Treasury has re-opened the retail infrastructure bond as targeting to raise Ksh250 million (US$2.47million).

The bond was opened to the public on Monday, May 27, and will run up to Friday June 7, 2019. The value date shall be on Monday, June 10, 2019 and will start trading at the NSE on Tuesday, June 11, 2019, the government has said.

“Following the successful uptake of M-Akiba Retail Infrastructure Bond in March which attracted 79 per cent subscription rate, The National Treasury, the Central Depository and Settlement Corporation and the Nairobi Securities Exchange have jointly reopened the M-Akiba Retail Infrastructure Bond Issue No MAB/2/2017/03 to offer Kenyans another opportunity to invest in the Government infrastructure Bond,” the state said on Monday evening.

The tenure for this bond will be one year and three months, with a redemption date of September 7, 2020.

Commenting during the re-open, CDSC Chief Executive Rose Mambo said: “As a continuing obligation, CDSC as the M-Akiba agent for the Government of Kenya will continue to perform her role of the issuing and paying agent for the bond. CDSC has put in place robust systems that ensure security of client information and seamless settlement of transactions.”

She added that during the offer period, CDSC will facilitate the creation of CDS accounts, processing of applications in the primary market, and shall offer registry services as a subregister to the Central Bank of Kenya.

According to CDSC, the bond has attracted over 459,586 M-Akiba bond investors since inception with the programme raising a total of Ksh594,750,000(about US$5.9 million).

“In the March offer alone, we were able to raise Ksh197,000,000(US$1.9 million )against a target of Ksh250,000,000(US$2.5million),” Mambo noted.

Reiterating her remarks, the NSE Chief Executive Geoffrey Odundo noted:“The Exchange is keen and committed to enhancing growth among local retail bond investors through MAkiba. The NSE will continuously provide a world class trading facility to facilitate the listing and consequent trading of the bond. The growth in the bond is a testament of its ability to enhance financial inclusion in line with the NSE strategic objective and the Capital Markets Master Plan 2014 – 2023”.

M-Akiba seeks to deepen and enhance financial inclusion through leveraging on increased mobile phone penetration to democratize access to formal financial systems for savings and investments.

More Kenyans are now able to participate in Government bonds by investing a minimum Ksh 3,000(US$29.63), which is considerably lower in comparison to the minimum Ksh50,000(US$493.88) required to invest in other Treasury bills and bonds.

Sold exclusively on Safaricom’s M-Pesa and Airtel Money — the paper which allows buying and selling of the bond offers a tax-free return of 10 per cent, payable every six months.

Treasury first tested the market with a Ksh150 million (US$1.5 million) pilot sale that was launched on March 23, 2017, which was oversubscribed two days to its closure. The first main sale launched on June 30 same year failed to impress, forcing Treasury to extend its sale by close to two months.

READ:We have lessons learnt on M-Akiba, NSE says

The government had set a target of Ksh1 billion (US$9.9 million) with an opening of taking up to Ksh3.85 billion (US$38million), but ended raising a paltry Ksh247.47 million (US$2.4million).

During the sale, 303,534 investors expressed interest but only 5,980 sunk their cash in the bond.

 

Martin Mwita is a business reporter based in Kenya. He covers equities, capital markets, trade and the East African Cooperation markets.

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