Kenya has once again taken the lead on innovation with the implementation of M-Akiba, a new way to invest in the government security bonds using your mobile phone.
Trading in government securities has for a long time been a preserve of high net worth individuals who can afford minimum ‘hundreds of thousands.’ With M-Akiba bond, that has been reduced to Sh3, 000 and at the comfort of your mobile phone.
How does it work?
M-Akiba is the first of its kind retail bond on mother earth where anyone who is a Kenyan with a minimum of Sh3, 000, the basics of handsets and has a mobile payment system will be able to buy a treasury bond to save and to earn returns.
M-Akiba has an easy to use ‘customer journey’ that includes dialling *889# on their keypad and following simple steps to open a CDS account. The process is such that one will be directed to the registration process and all the necessary Central Bank of Kenya guidelines of Know Your Customer (KYC) verified in three or less simple steps.
Contrary to common belief, one does not need to have a smartphone to register. The inter-phase has been designed such that even phones with limited screen display such as a ‘kabambe,’ ‘kaduda’ or a ‘mulika mwizi’ works just fine. One thing to note, an individual is not allowed to register twice. One CDS account, one registered mobile money transfer number.
Once the registration is done and upon going live, an individual will be required to load their phones with at least Sh3, 000 to trade. In M-Akiba there are no lots like in other bond issues. Any individual will be allowed to trade a maximum of Sh140, 000 a day in line with central Bank guidelines on Mobile Network Operators (MNOs) money transfer platforms.
M-AKIBA will attract a 10% coupon rate also known as interest.
Payments of interest or coupon on M-AKIBA will be made twice a year and directly to MPESA or Airtel money.
M-Akiba is a straight bond. A straight bond is a bond that pays interest at regular intervals, and at maturity pays back the principal that was originally invested. Straight bonds are debt instruments because they are essentially loaning money (creating debt) to an entity.
M-AKIBA will also not attract price variations. An individual will be able to buy or sell an M-AKIBA anytime—day or night–through market makers (brokers, investment banks fund managers among others). Any secondary buying or selling will be subject to availability of the same.
M-AKIBA has been designed to be a product that Wanjiku would understand—any individual who wishes to off-load M-AKIBA upon purchase will find a ready market and will incur mobile money transaction costs only.
This new product will encourage savings, ensure financial inclusion for Kenyans as well as raise money for the Kenyan Government. According to Quartz Africa, The Kenyan government needs a new pool of cheap money to finance large infrastructure projects and an upcoming election.
For students, this is a move that will help you save for after the graduation as one tries to find employment or save for capital to start a business venture.
Source: Capital Business