The National Treasury is set to launch the historic mobile-based bond trading platform, M-Akiba on Thursday. The platform, which will open an avenue for small traders to start trading in bonds will be launched and operated on a pilot basis.
It will pay investors a tax-free interest of 10 per cent, intensifying competition for cash deposits between the government, banks and saccos.
The government will then issue a three-year bond of Sh. 150 million, having scaled down from the five year bond of Sh. 5 billion.
Small investors will be able to lend to the Government as little as Sh. 3,000 and make top-ups in multiples of Sh. 100. Since it is a straight bond, it will be paying interest at regular intervals – twice a year – and pay back the principal upon maturity in 2020.
Safaricom and Airtel will act as the placing agents and will paid an interest of 0.1 per cent.
Once the special bond is in full course, individuals will be able to bid up to a maximum of Sh.140,000 per day for the income tax-free bond.
Bond buyers currently pay a minimum of Sh.50,000 or Sh.100,000 for infrastructure bonds, locking out many Kenyans from accessing the market.
“Investors will receive details of amounts invested via text message upon making payment via mobile money…interest income on M-Akiba is tax-exempt,” the bond prospectus says.
