Central Bank eyes revamp of M-Akiba to improve its uptake

Central Bank Governor Patrick Njoroge. [David Gichuru, Standard]

The Central Bank of Kenya (CBK) will relaunch M-Akiba in a bid to spur uptake of the retail infrastructure bond.

CBK Governor Dr Patrick Njoroge said the revamped product will go live by June this year and will be more user friendly to investors. It will also allow for the purchasing of other securities.

“We hope that in the next two or so months, we are expanding our processes so that you can buy Treasury bills and bonds on your mobile phone,” said Dr Njoroge. The CBK boss said the process of buying government papers is still long and complicated to average Kenyans - often requiring a physical visit to the apex bank.

“We do have M-Akiba but we are revamping this whole system so that in two months, anybody can buy specific Treasury bills and securities through their phone without requiring all the complicated mechanisms that we have today,” he said.

Dr Njoroge was giving a presentation to the Senate Committee on Information and Communication on the implementation of the National Payments Strategy (NPS).

M-Akiba was launched in 2017 by the National Treasury, allowing investors to purchase the bond from a minimum of Sh3,000.

The bond was administered through the CBK in collaboration with the Nairobi Securities Exchange (NSE), Central Depository Settlement Corporation (CDSC), mobile network operators and the Kenya Association of Stock Brokers and Investment Banks.

 In the pilot run conducted in March 2017, 102,632 people registered their mobile money accounts and the government raised its target of Sh150 million ahead of schedule.

The full launch saw 303,534 people registered yet the government only managed to raise Sh247 million, 24 per cent of the Sh1 billion target.

Since 2017, the government has raised Sh1 billion in five M-Akiba issuances that attracted more than 500,000 registrations.

However, investor participation in the infrastructure bond in recent years has been muted.

According to a survey conducted by the CBK and Financial Sector Deepening (FSD) Africa on 500 M-Akiba investors, only four per cent (11,697) of the people who registered went on to purchase the bond. According to the survey, the majority of the bond investors were formally employed, had a university education or higher, lived in Nairobi and had a regular income.

“Although investment did not meet expectations, the study found that the product was fairly successful in bringing a new broad-based investor group into the market for government paper: 85 per cent of customers had never bought a bond before,” explained FSD Africa in the study.   

Last year, Treasury moved the issuance of M-Akiba away from the NSE and CDSC to CBK. Dr Njoroge says the relaunched M-Akiba will have more efficient know your customer mechanisms and will be interoperable with all payment service providers.