Move will increase the number of investors in government securities
Kenya began selling its first mobile phone-based government bond on Thursday, part of an ambitious plan to broaden the pool of investors in government securities.
According to the country’s Cabinet Secretary for Finance, Henry Rotich, the government is initially making a limited offer of Ksh150 million (US$1.46 million) to test the system before a bigger offer in June.
Central Bank of Kenya Governor Patrick Njoroge said the bond, called M-Akiba, allows people to invest as little as Ksh3,000 (US$29.20).
“This is a product that will dramatically improve the savings culture of our people,” he said.
Treasuries in other emerging economies will be watching with interest. Most would like to broaden their sources of borrowing beyond local banks and international financial institutions.
Kenya pioneered the use of mobile money in 2007 with M-Pesa, a money transfer service, by telecoms operator Safaricom.
The M-Akiba bond will be offered on M-Pesa and similar mobile-phone financial services by other firms. Investors will be able to buy the bond through their phones, where a record of their holdings will be stored. Coupon payments will also be made through the phone.
M-Pesa allows users to transfer cash and make payments on even the most basic mobile phone. In partnership with local banks, Safaricom has since expanded the service to offer savings, lending and insurance products.