Sh3,000 is all you need to buy T-bills by mobile from July

Retail investors will from next month electronically invest in government securities with as little as Sh3,000 in a move brokers say is bound to improve market liquidity.

President Uhuru Kenyatta said the Central Bank of Kenya (CBK) is finishing implementing the Treasury Mobile Direct (TMD), a system enabling the public to trade in government securities, including through mobile phones, set for launch next month.

The system was advertised in 2012 and was expected to go live late last year. It is set to open up Treasury bills and bonds investment to thousands of Kenyans unlike in the past when it was a preserve of banks and insurance companies.

“TMD will enable more retail investors to access government fixed income securities at their convenience and is proposed to have a minimum investment denomination of Sh3,000 only,” Mr Kenyatta said in a memorandum to the National Assembly justifying refusal to assent to the Central Bank of Kenya (Amendment) Bill, 2015.

As a result, he rejected changes to the Act as proposed by Mukurweini MP Kabando wa Kabando which sought to enable the public to participate in government securities’ sale through electronic means and lower minimum investment denominations. The National Assembly passed the Bill on February 18.

“Whereas the Central Bank of Kenya (Amendment) Bill, 2015 was presented to me for assent, in accordance with provisions of the Constitution on May 13, 2015, now therefore, in exercise of the powers conferred on me by Article 115 of the Constitution, I refuse to assent to the Bill,” he said.

Mr Kenyatta asked the National Assembly to delete Clause 2(2) of the Bill which sought to amend Section 45 of the Central Bank Act.

“It will help with liquidity when you reduce the threshold, but it means that brokers will have to deal with more people when it comes to the secondary market,” said Alex Muiruri, head of fixed income at brokerage Kestrel Capital. “It will also be good for price discovery because you have more participants in the primary market.”

Under the amendment, Mr Kabando had sought to compel CBK to “put in place mechanisms to enable the public participate in government securities through electronic means and lower minimum investment denominations”.

“This provision, in my considered opinion, is not necessary since its purpose can be achieved administratively,” said the President.

Mr Kenyatta told Parliament that the legal framework for payment through electronic means is in place through the National Payment System Act and the Kenya Information and Communications (Amendment) Act, 2013.

“In addition, the lowering of minimum investment denominations is usually done administratively by the Central Bank and therefore this does not need to be legislated.

“In view of the foregoing, I recommend that sub-section (2) of the Bill be deleted,” said the memo to the MPs.

On Tuesday, House Speaker Justin Muturi informed MPs of the President’s refusal to sign the amendments to the CBK Act as proposed by Mr Kabando.

“Consequently, should the House concur with the President’s recommendation, it follows that there will be no amendment to the Central Bank Act,” Mr Muturi said.

He asked the departmental committee on Finance, Planning and Trade to which the memorandum is referred to be guided accordingly.

- Additional reporting by Geoffrey Irungu.