More than 17,000 Kenyans had taken up the mobile phone-based government security in the first 24 hours, raising over Sh16 million as more Kenyans expressed appetite for the low-risk investment option.
The newly launched government bond purchase, M-Akiba was headed towards the 15 per cent subscription by the close of the second day, of trading raising hopes for a new channel for local borrowing to finance infrastructure growth.
Exclusively done through the mobile phones, the initial offer of Sh150 million will close on April 10.
There are plans for a bigger launch of a Sh4.85 billion bond in June.
The product, which marks another first in the country’s financial technology innovation, went live on Thursday.
Mobile users are allowed to purchase as low as Sh3,000 of the government security to help boost Treasury’s budget for infrastructure. One can purchase up to Sh140,000 in a day.
Treasury Cabinet Secretary Henry Rotich, who presided over the launch, said the initiative targeting the average Kenyan would have multiple benefits for both the government and the investors.
“M-Akiba is the world’s first mobile based government bond and we hope to reap many benefits from it, including financial literacy regarding investment in bonds, financial inclusion as well as promotion of the savings culture which we are really lagging behind in,” Mr Rotich said.
Overwhelmed the system
After the launch, the uptake was so rapid that the mobile network systems were overwhelmed at some point.
Many of those trying to buy the bonds were unsuccessful for the better part of Thursday afternoon.
At this rate, the insiders estimate that the three-week window may be too long as the initial offer may be exhausted before then.
“There was a technical hitch but it was short-lived and only affected one mobile operator whose transactions were very many and rapid.
“Obviously the uptake was beyond our anticipation and this was a normal occurrence that should not cause any alarm,” a source from those running the back office of the trading told the Business Daily in confidence.
Kenya hopes to use M-Akiba as one of the easiest avenues of mobilising local credit while allowing its citizens to participate in treasury bills, an unpopular investment channel especially among low-income earners.
Treasury is also banking on the 10 per cent interest paid bi-annually within a period of three years to woo more buyers, as the rate is higher than that offered by banks while its interest is also tax-free.
Buyers will receive their first interests on October 9, 2017, followed by April 9 and October 8, 2018, April 8 and October 7, 2019 and finally on April 6, 2020.
Central Bank of Kenya Governor Patrick Njoroge termed the initiative “transformational and a momentous milestone” in deepening financial inclusion.
“This will dramatically change the savings culture of our people. The success of M-Akiba is a testimony of how collaboration can democratise finance and there are many other products coming to show case Kenya as a hotbed of innovation beyond financial technology,” Mr Njoroge said during the Thursday launch.
Mr Rotich said discussions had been initiated with the CBK to raise the daily limit of mobile money transaction from the current Sh140,000 to allow more uptakes of the bond.