Kenya to launch world’s first mobile-tradable bond issue

Boubacar Diallo

The Kenyan government, in partnership with telecom operator Safaricom and the Nairobi Securities Exchange, plans to take out the world’s first bond loan via mobile. The system called M-Akiba is simple. Those interested will be able to open a deposit account with the central bank directly via their mobile phone, without having to use a broker or bank.

The inaugural operation will involve a bond loan of 5 billion shillings intended for infrastructure projects, and which will be launched on October 21, 2015, we learned from a press release from Safaricom. The latter has emerged as the undisputed leader in mobile banking in Kenya, with total transactions reaching a total value of 4 trillion shillings ($ 40 billion) in the first quarter of 2015.

The opportunities available with this mechanism concern both the initial offer and the secondary market. Unlike conventional government bonds that have a face value of 5,000 shillings, digital titles will cost only 3,000 shillings ($ 28). However, it will not be possible to invest less than 50,000 shillings and more than 140,000 shillings, which limits the number of people ultimately eligible for the initial offer.

On the other hand, analysts and observers expect the project to strengthen the liquidity of the secondary bond market, to the extent that buying and selling them will now become easy. In addition, it is expected to be an excellent way to make a profit on your virtual bank account in the medium and long term.

If the test cost succeeds, it is not to be excluded that the model will be carried on other stock market products. Tanzania recently said that it is experimenting with some success with setting up a mobile trading platform. Only, in the latter case, stock brokers still play a central role. In the case of Kenya, the role of these stock market intermediaries could be reduced to providing information, which, if necessary, would reduce their income base.

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