Sh1 billion M-Akiba bond in slow start with Sh17.7m sales

What you need to know:

The slow uptake is a stark contrast to the initial offer of Sh150 million floated in March where over Sh1 million was purchased within the first one hour of its launch and offer hit target ahead of deadline.
The three-year infrastructure bond will be on sale until July 21 and left another Sh3.85 billion to be sold at a later date depending on the subscription of the second tranche.
The Treasury’s Director of Public Debt Wahoro Ndoho did not respond to our calls and SMS question on the sale.

The sale of the Sh1 billion M-Akiba bond started on a low note, with investors buying Sh17.7million or 1.7 per cent of the mobile phone-based bond six days after it was floated.

The number of those registering to take up the offer has been equally low, adding 21,000 new registrations made since the launch last Friday, Treasury sources revealed.

The slow uptake is a stark contrast to the initial offer of Sh150 million floated in March where over Sh1 million was purchased within the first one hour of its launch and offer hit target ahead of deadline.

The three-year infrastructure bond will be on sale until July 21 and left another Sh3.85 billion to be sold at a later date depending on the subscription of the second tranche.

The Treasury’s Director of Public Debt Wahoro Ndoho did not respond to our calls and SMS question on the sale.

The second tranche will be able to trade on the secondary market at the Nairobi Securities Exchange (NSE) #ticker:NSE from July 25.

READ: Treasury seeks to raise Sh1 billion in second M-Akiba bond offer

“We are going to dispatch agents to all the Huduma centres and beef up investor’s education to promote awareness and boost the sales from next week,” said Wagemma Irungu, an executive at the NSE.

“Now investment groups can use their bank accounts to buy the offer through PesaLink and that is also expected to prop up sales,” Mr Wagemma said.

The Pesalink inclusion allows investors to make bond purchases of up to Sh999, 999, boosting uptake and removing the lower daily cap of Sh140, 000 set for mobile phone cash transactions.

M-Akiba allows a single investor to put in a minimum of Sh3,000 and a maximum Sh1 million, earning tax-free interest of 10 per cent.

The sale of bonds via mobile phones is a world first and is aimed at expanding the pool of investors in a country that needs money for infrastructure projects and where many people do not have a bank account. Few ordinary Kenyans bought government bonds, scared off by the minimum investment of Sh50,000 and the need for a commercial bank account.

Kenya has borrowed heavily in the past four years to fund an ambitious development programme, including new roads and railway.