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Great start for Kenya’s M-Akiba, world’s first mobile money-only government bonds

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All Kenyan government bonds made available through M-Akiba, which allows ordinary Kenyans to buy bonds using mobile money, have been sold out with five days left to the end of its original deadline.

The government is seeking an alternative source of funding for its infrastructure projects, and had launched M-Akiba on March 23 to extend its pool of local borrowers. It offered KES 150 million ($1.5 million) in bonds in its pilot run, which was to end on April 10.

To be able to purchase a bond, all a citizen had to do was to register for an account using a USSD service available on Kenya’s two largest telephone networks, Airtel and Safaricom, and then use those networks’ mobile money services to effect transactions.

In the three weeks M-Akiba has been online, slightly over 102,600 Kenyans have signed up, but only a tiny fraction of them was required to take up all the available government bonds.

Just 5,692 investors gobbled up the bonds, with investments ranging from the minimum of KES 3,000 ($30) to KES 1.13 million ($11,300) according to the National Treasury.

In June, the government will release bonds worth KES 4.85 billion ($48.5 million) through M-Akiba.

For the ordinary citizen

M-Akiba has been designed to incentivize ordinary Kenyans into participating in the capital markets, while serving as a savings platform.

This is why it has set a minimum investment amount of KES 3,000, which is certainly more affordable than the KES 50,000 ($500) that was previously required.

Furthermore, its registration process is considerably simpler, as the previous system required one to have a bank account before visiting the Central Bank of Kenya to open an account with which you would trade in bonds.

Using mobile money is an attempt at tapping into a torrential stream that cumulatively moved KES 3 trillion ($30,000,000,000) in 2016, an amount that would finance the nation’s budget and still leave a lot of money lying around.

M-Akiba offers a tax-free interest rate of 10%, higher than the 7% commercial banks can offer, as their interest rates have been capped by law.