Treasury turns to ‘mama mboga’ to fund State projects

Central Depository and Settlement Corporation CEO Rose Mambo demonstrates how M-AKIBA is registered on the mobile during the Mini-Launch of M-AKIBA at the National Treasury in Nairobi. Photo: Moses Omusula

You can now make history by being among the first people to directly lend your Government as little as Sh3,000 through your mobile phone.

Thursday, Treasury Cabinet Secretary Henry Rotich ushered a new era by leading the way in buying the first Sh3,000 of the limited edition of Sh150 million of M-Akiba bond.

"We are hopeful that a new pool of investors will come forward and increase level of democratisation at the bond market by allowing both low and high net worth individuals to trade in bonds and spur saving culture," said Mr Rotich.

The bond, dubbed M-Akiba that has been in the offing for over two years brings down the minimum amount one can lend the Government from Sh50,000.

In just under 45 minutes, Kenyans warmed up to the bond by buying Sh405,800. This means that if the rate is sustained, the amount could get finished in under two days to allow trading at the secondary market to begin.

Currently, over 23 million Kenyans have a mobile phone, meaning that if each of them can afford Sh3,000 and actually decides to buy, Sh69 billion could easily be raised with a click of a button. This is 11 times higher than what the Government wants to raise in June.

Mr Rotich said the limited edition coming ahead of the big launch of Sh5 billion bond in June gives Kenyans a chance to invest in Government at 10 per cent return while benefiting from the same project the money will fund.

"The rate you can be paid in a bank is about seven per cent and here, we have added you three percentage points. This should give you an opportunity to decide whether you want to leave your money to lie idle in the bank or give us here to make infrastructure for you," said Rotich.

A bond, a term many Kenyans are more familiar with in Kenya's judicial system could soon start ringing a bell to the common mwananchi when it is mentioned in the financial context.

In financial world, a bond is a debt investment in which an investor, either local or foreigner, loans money to a Government or company for a period of over one year at a given interest rate.

"You could think of everyone out there say primary school teachers, police officers, people working in kiosk, mama mbogas; all of them can put their money in Government securities like they could pay for their products. If this is not transformation, I don't know what it is," remarked Central Bank of Kenya (CBK) Governor Patrick Njoroge during the launch.

Once one has purchased the first Sh3,000, he will be at liberty to top up with as little as multiples of Sh100.