The seemingly lucrative M-Akiba bond fell short by 86 per cent at the Nairobi Securities Exchange three weeks after its debut launch on June 30.
The retail government bond which sought to raise Sh1 billion only raised Sh140 million bought by about 235,672 investors.
The government intended to float the first Sh1 billion out of the remaining Sh4.85 billion for a three week period ending July 21, with the remaining Sh3.85 billion to be staggered on a fortnightly basis.
This was following the success of the pilot issue of Sh150 million on March 23 which attracted 102,632 investors with 5,692 representing only six per cent of the total interested investors buying the bond.
The inaugural mobile infrastructure bond closed after the entire Sh150 million was taken up by investors 13 days after its issuance.
Treasury however said that there had been a strong surge in the bond’s uptake in the three days to its closing which resulted to an extension of the M-Akiba bond sale to September 11.
“It is only right that these investors are given the opportunity to participate,” Treasury public debt management director general Wohoro Ndohho said.
He said that to ensure all investors who bought the bond to the date of July 21 are not disadvantaged by this extension, any interest accrued to them over the extension period would be paid on a pro rata basis.
Investors are set to be paid 10 per cent interest every six months, beginning January next year.
The revolutionary M-Akiba Bond is meant to open government securities trading to the lower income group.
The bond’s minimum investment is Sh3,000 with a daily transaction limit of Sh140,000, a move calculated at growing national savings and investments to a third of the gross domestic product as targeted in the Vision 2030 development blueprint.
Treasury expects to use the mobile-based bond offered through M-Pesa and Airtel Money and the inter-bank transfer platform PesaLink to mobilise funds for infrastructure development, easing pressure on external borrowing through crowd funding.
The Treasury issued the bond – the first of its kind in the world- offers a three percentage points advantage over banks, currently giving interest rates at seven per cent after the capping of interest rates on September last year.
In April, Ndohho said that the issuance of the major Sh4.85 billion M-Akiba bond would be determined by the market “appetite”.
“The release of the bond (Sh4.85 billion) can either be once or slowly depending on the appetite,” Ndohho said “we are looking at the trends.”