Hopes are high that Kenyans will shake off the doubts that dogged the issuance of the pioneer mobile -based government bond (M-Akiba) last year and fully subscribe to the new one planned for this year.
The hopes arise from the realisation that the government’s decision to raise money from Kenyan to finance its development projects will reduce Treasury’s reliance on development partners and commercial banks.
Treasury will to raise Sh247 million out of Sh1 billion target with a Sh4 billion Greenshoe option. The consensus is that Treasury’s failure to raise the target amount was due to foreseen factors and action should have been taken to mitigate them.
Hopefully, the lessons learnt will lead to success this year.
To guarantee this success, Treasury may need to widen its net to include institutions that routinely hold huge sums of money including Saccos, Co-operative Societies, and pension funds.
Pension funds hold about Sh1.2 trillion - about half of Kenya’s annual budget. Perhaps the time has come to relook regulations and laws that govern this industry to ensure it contributes its fair share to the Big Four Agenda.
It makes no sense for Treasury to beg for funds to build decent houses for employees of private companies whose retirement funds are invested in collapsing banks and in firms that repatriate their profits outside the country.
Encouraging cash crop farmers to invest in government bonds would increase savings rate because most of these earnings are frittered away in conspicuous consumption including alcohol.
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The best way is to encourage farmers have their investments sums deducted at source to reduce the investment costs.
Farmers would then be encouraged to use bond certificates to borrow cash from banks to finance value addition factories for their produce before export.
This would create employment for the youth and enrich farmers. Apart from coffee and tea, there are more fruits and vegetables that can only grow in the tropics.
Spices are another category whose global demand is rising fast. Getting Saccos to invest in Treasury bonds would give their members better returns compared to plots in urban areas.
This would bring sanity into land prices, making it easier and cheaper for the State to build houses for employees.
The expectation is that these measures raise enough cash for the State to avoid borrowing from banks at high rates.