M-Pesa was launched by Safaricom in 2007 and last recorded a total of 23.3m customers out of the country’s near 44m population. Kenya’s National Treasury leveraging on the country’s success with M-Pesa recently announced the launch of the first mobile only Government Infrastructure bond. Known as M-Akiba, the solution 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.
Individual retail investors previously only accounted for 2% of government bond uptake, with the remaining 98% bought up by institutional investors. But the popularity of the M-Akiba bond could be high if mobile user rates are any guiding measure.
The Kenyan government first outlined plans for the bond in its national budget back in June this year. “This will allow Kenyans to enjoy significantly higher interest rates on government securities compared to bank deposits, through a convenient platform and with a low entry threshold,” the budget document stated.
The M-Akiba infrastructure bond will be on sale for as little as 3,000 Kenyan shillings ($28) and will be offered on the widely-used money transfer and micro-financing mobile platform M-Pesa. Previously, the minimum investment threshold for a government bond was 50,000 Kenyan shillings ($477). Kenya’s Treasury hopes to raise 5 billion Kenyan shillings ($47.7 million) through the bond sale.
Ordinary Kenyans will be able to lend at least 3000 Kenyan shillings ($28) to their government and earn interest following the launch of an infrastructure bond trading via mobile. The bond — a first for mobile globally — is tailor-made for retail investors.