You can now lend the Government as little as Ksh 3,000 through your mobile phone money transfer service. Through the initiative, the National Treasury is seeking Ksh5 billion from individuals through the Treasury Direct System, M-Akiba to collect the cash.
The Mobile phone USSD traded bond will see your registration, trading and settlement done through your handset. To register, dial *889#. To purchase the bond, you will open central depository accounts via your mobile phone without engaging in physical documentation.
This mobile phone-based purchase of the bond is the brainchild of the Nairobi Securities Exchange, the Capital Markets Authority (CMA), the National Treasury, stockbrokers, investment banks, Central Depository and Settlement Corporation, ICT Authority of Kenya and Nairobi International Financial Centre Authority. Interestingly, it comes hot on the heels of the lowering of minimum amount needed to purchase bonds from Sh50,000 to Sh3,000.
In the current bond issue, interests earned will be paid out every six months. Upon maturity of the bond, the principal amount you invested and the interests you have earned from the bond will be paid through your mobile.
Additionally, investors looking to purchase the bond will be able to continue buying in the subsequent periods up to the date of closure of the issue or when the targeted amount of Kshh5 billion will have been achieved. Investors, who miss out on the bond in the primary issue will have the option of buying it in the secondary market at the NSE.
However, purchase of the bond in the secondary market will be determined by the market forces. “The interest rate (on the bond) will be higher than the interest rates payable on small deposits by commercial banks and other investment channels, and as an infrastructure bond, interest payments to investors will be tax free,” Mr Rotich added.
Local banks currently offer between two and seven per cent for funds in fixed deposit and savings accounts. This means that Sh3,000 will earn you just Sh60 at savings account at two per cent interest rate.
M-Akiba bond will enable you to lend the government money repayable within specified periods. The final interest payable will be lumped together with the principal that you invested, providing you with a guaranteed and more profit than what you would get from your bank.
At 14 per cent rate, an investment of Sh3,000 is set to give investors a return of Sh210 every six months and Sh420 at the end of the year.