Summary
- At least 17,000 Kenyans subscribed for the bond on the first day, raising more than Sh16 million.
- The uptake was so rapid at some point that the mobile network systems were overwhelmed.
- By close of the second day, uptake was headed towards 15 per cent subscription .
- The initial offer of Sh150 million will close on April 10 while bigger launch of a Sh4.85 billion bond is planned for June.
- Mobile users are allowed to purchase as low as Sh3,000 of the government security.
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.
Woo buyers
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.
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