Treasury plans new M-Akiba issue

The Treasury said it will issue a new M-Akiba bond this year as part of its continuing strategy to promote savings culture and deepen financial inclusion. FILE PHOTO | NMG 

By OTIATO GUGUYU
More by this Author

Summary

• The National Treasury has paid Sh935.9 million in principal and final interest to 13,592 retail investors who bought into the second issue of the mobile bond M-Akiba, and is mulling a return to the market with a new issue.
• The payment included a final interest payment of Sh44.5 million and principal amount of Sh891.3 million to M-Akiba 2 investors.
• The government raised a total of Sh1.04 billion from the five mobile bond tranches (of M-Akiba one and two) since 2017, attracting a total of 582,572 M-Akiba registrations in a strategy to attract retail investors to the segment by lowering minimum bid limits to as low as Sh3,000.

The National Treasury has paid Sh935.9 million in principal and final interest to 13,592 retail investors who bought into the second issue of the mobile bond M-Akiba, and is mulling a return to the market with a new issue.

The payment included a final interest payment of Sh44.5 million and principal amount of Sh891.3 million to M-Akiba 2 investors.

The government raised a total of Sh1.04 billion from the five mobile bond tranches (of M-Akiba one and two) since 2017, attracting a total of 582,572 M-Akiba registrations in a strategy to attract retail investors to the segment by lowering minimum bid limits to as low as Sh3,000.

“To date, a total of Sh312.4 million has been paid out in interest to all M-Akiba Retail Infrastructure Bond Investors and Sh1.04 billion raised,” said Central Depository and Settlement Corporation (CDSC) chief executive Nkoregamba Mwebesa.

He added that the objectives of the M-Akiba bond were achieved as the National Treasury was able to leverage on increased mobile phone penetration across the country to democratise access to formal financial systems for savings and investments among Kenyans.

The CDSC was the selling agent of the bonds.

The Treasury said it will issue a new M-Akiba bond this year as part of its continuing strategy to promote savings culture and deepen financial inclusion.

They will, however, need to find a way to reduce the cost of the exercise, it noted.

Kenya’s savings rate was 6.1 percent of Gross Domestic Product in 2018 down from 6.5 percent in 2017 and an all-time high of 11.7 percent in December 2007.

“The National Treasury will continue issuing M-Akiba bonds targeting the retail end of investors through more efficient platforms at least cost to the exchequer while ensuring wider coverage,” said Dr Haron Sirima, the director general Public Debt Management Office.

M-Akiba—which is an infrastructure bond— with a tax free coupon rate of 10 per cent paid semi-annually was seen as a bargain given the average savings rate has declined to 4.1 per cent for deposits in banks.