Banking system misses out on M-Akiba bond cash

National Treasury Public Debt Management Director General Wohoro Ndoho rings the bell to launch trading of the M-Akiba bond at the Nairobi Securities Exchange on April 11, 2017. [File, Standard]

Banks have missed out on transacting the lucrative Government phone-based bond after delays scuttled an attempt to include Pesalink among the payment platforms to be used.

Currently, the M-Akiba bond only trades on M-Pesa and Airtel Money, through which investors purchased the maiden Sh150 million bond launched in March.

Safaricom’s M-Pesa platform handled Sh142 million of the total amount while Airtel Money transacted Sh8 million, underlining Safaricom’s dominance of the mobile money business.

Sources at the Treasury indicated Pesalink, the interbank money payment switch for 26 lenders, may not be used when the M-Akiba makes a comeback on Friday.

“We are hoping to launch the product on Friday and the chamas will be involved, but for Pesalink I am not sure how the testing went because that was the condition for being included,” the source indicated.

Treasury has, however, set itself a lower target of Sh1 billion with a greenshoe of Sh3.85 billion, which means it will be open to take any subscriptions above its target.

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Initially, the Government was supposed to offer an additional Sh4.85 billion in the bond to make up a total of Sh5 billion, scheduled to be launched on June 27 but delayed by President Uhuru Kenyatta’s tight campaign schedule.

Treasury is bent on launching it before the end of the current financial year but may have realised it would have been difficult to achieve the full amount.

The pilot tranche of the bond was issued tax-free at 10 per cent interest rate. Pesalink had hoped to cut the wind off the sails of telcos operating mobile money, especially since it allows higher value transactions.

Raise ceiling

Unlike the mobile platforms that have a daily limit of Sh140,000, the banking system can handle person-to-person money transfers from as low as Sh10 to a high of Sh999,999.

Treasury wants to raise the ceiling on how much investors can buy of the phone-based bond when the second offer is launched, with a specific target on chamas who can divert idle cash from banks to the Government debt paper.

Although investors can put in a minimum of Sh3,000, the Government will need higher bids or huge turnover to meet its target.

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The bond will, however, be pegged on the telcos’ limit of Sh140,000 after parties failed to iron out the deal to expand the amount that can be transacted daily.

Through M-Akiba, the Government aims to increase savings as well as allow ordinary Kenyans to invest in Treasury bonds.

Traditionally, investors had to part with a minimum Sh50,000 for Treasury bonds and Sh100,000 for Treasury bills.

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