Treasury Secretary Henry Rotich has said the government will launch the much awaited mobile-traded government securities, M-Akiba bonds, in a months’ time offering an alternative savings option to retail investors.
It will be operated by the Nairobi Securities Exchange (NSE), the Central Depository and Settlement Corporation (CDSC), the Central Bank of Kenya (CBK) and mobile service providers. “Once they are ready we will set the launching date. I understand they need about two weeks for primary dealership infrastructure and another two weeks for secondary trading infrastructure,” Mr Rotich told Kenya’s Business Daily.
With M-Akiba, banks will come under increased competition for deposits as any Kenyan with a mobile phone and as little as Sh3,000 will be able to invest in government securities. The move comes at a time interest-earning deposit rates are legally attracting 70 per cent of the loan rate.
When launched, individuals will be able to start bidding for the five-year income tax-free bond. Investors will, however, be able to bid up to Sh140,000 daily — the maximum cap for mobile money transfers — during the week it goes on auction.
The government is stepping up to challenge for deposits even as banks rush to reclassify deposit accounts to avoid paying huge interest on client money.
M-Akiba may be lucrative with the current rates at which the Treasury is selling the three month-Treasury bills and bonds at, which are much higher than that offered under the deposit rate in the new banking law.
