Kenya has launched its first government bond to be offered exclusively through mobile phones this week, taking advantage of the country’s booming mobile money market, CNBC reports.
The platform, M-Akiba will also rapidly increase transaction time, with trades that previously took an average of two days made instantly via mobile. Kenya’s Treasury hopes to raise 5 billion Kenyan shillings ($47.7 million) through the bond sale.
The Treasury is initially expected to auction the first tranche (Sh150 million) of the bond that allows every individual to invest a minimum of Sh3,000 ($29.00) and any additional amounts in multiples of Sh100 ($0.97).
Only two mobile operators, Safaricom and Airtel have been chosen to act as placing agents and they will be paid commission at the rate of 0.1% of actual sales (at cost) net 5% withholding tax.
“Throughout the process, we have kept our eyes on the ultimate target: promoting financial inclusion in Kenya,” Mr. Geoffrey Odundo, CEO, NSE said in the report, “
“The M-Akiba bond will enable an entirely new group of investors to access Government debt securities via their phones, which will undoubtedly drive up the national savings rate.”
M-Akiba is a Kenyan Government issued retail bond.
It’s a mobile traded bond and all activities relating to registration, trading, the settlement will be via a mobile platform. The target Amount is Ksh. 5 Billion. ($48 million)
Initial minimum investment amount per account is Ksh. 3,000 ($29.00), with consecutive trades open for any amount.
Maximum investment per account per day is Ksh. 140,000 ($1,3500). Tenure of Bond is 5 years and the coupon for the bond is payable semi-annually after every 6 months. The bond is tax-free as provided for under the Income Tax Act.
To invest in the bond, customers will need to have a valid ID, dial *889# and follow the prompts. Upon maturity of the bond, the principal amount and coupons (interest from the bond) will be paid through M-PESA.