Kenya’s Treasury launched the first-ever government bond offered exclusively via mobile phone, M-Akiba Bond shows how the growing prominence of mobile money solutions is evolving.
Mobile phones have become part of everyday life and more frequently we have begun to do more and more of our payments through the device.
“Everybody has a cell phone and for us that’s a good entry point - when you look at the number of Kenyans using mobile money, we are talking about over 20 million, so for us that link between the mobile money, the cell phone and then investment in government securities was an obvious link to make,” said Rose Mambo, Chief Executive, Central Depository and Settlement Corporation (CDSC).
Before this the minimum you could invest was 50 000 Kenya shillings says Mambo, by allowing the investment of minimum of 3 000 Kenya shillings it allows for more to access to more people.
“The government needs to raise money through its government bond programme and on the other hand they are also looking at financial inclusion and trying to see how they can get Kenyans to invest and save more,” she added.
When an individual registers for mobile money, their mobile network operator would have their KYC (Know Your Customer/Client) information, which is how CDS will verify who you are, there after you can open an account and invest in the bond.
“M-Akiba is simplifying everything, removing all the paperwork and making it accessible and so all you need to have is your cell phone and registration with any of the mobile money payments,” said Mambo.
Now that the minimum is lower, there might be some concerns about any returns or growth on their M-Akiba investment but Mambo says it is worth comparing this to other investments.
“On the one hand what would you get as a Kenyan if you were to save your money in a bank? On the other hand, at what cost is the government raising money? And trying to find a middle ground that is lucrative or attractive to the investor and also enables the government to raise money at a lower level,” she said.
Mambo adds that for now the rate hasn't been decided but it will be doing road shows all over the country to assess what rate would be the most attractive for investment.
Its main challenge is that most people don't know much about government bonds, the bond market or the fixed income market so most of it will be to explain and help people understand how it works.
“The challenge for us over the next three weeks is a lot of investor education, a lot of promotion just to ensure that people understand what this product is, what are the benefits for me and how do I actually get involved in investing in the product.”