Kenya’s mobile revolution has been majorly about cash transfer through M-Pesa. This groundbreaking innovation has mainly operated as a payment platform linking buyers as well as sellers, and created a fertile ground for shylocks peddling mobile loans, and betting firms that promise quick returns.
Now investment platforms are entering the fray to cash in on the mobile payment. One of the pioneers in this domain is Delila Kidanu who has founded Koa, a mobile savings venture giving Kenyans with as little as Sh1,000 access to fund managers for a 10 percent return.
Ms Kidanu admits that investment products “are late to the market” but are now seeking to seal the huge gap.
“We are competing with people who say ‘give me Sh100 and maybe I will give you Sh1,000’. Savings and investments are not sexy. They have delayed gratification but we are building something more sustainable,” she says.
The future of mobile phones, she notes, will be to democratise investments enabling young people to use very little sums of money to start buying bonds, stocks and other financial instruments at a micro level.
Egyptian brokerage firm EFG Hermes, which recently launched a mobile application ‘EFG Hermes One’ targeting retail investors, says they have been met with the perception that buying shares is for the rich.
EFG Hermes director, frontier equity sales & head of equities Kenya, Muathi Kilonzo says most people think that you need Sh1 million to sign up to the platform, yet there are shares trading at less than one shilling.
“A lot of people have been asking me what is the minimum investment to sign up; ‘do you need Sh1 million?’ I tell them even with Sh100 you can start trading. The impression we get is people think buying shares is only for the rich,” Mr Kilonzo notes.
Kenya, he says, had a very robust army of retail stock investors in the early 2000s but this has changed. He is of the view that there is potential to build back that interest if the process can be made easy like digitising the Central Depository and Settlement Corporation (CDSC) so that one can do it at a click.
Ms Kidanu says her firm conducted a research among ordinary Kenyans and discovered that many people, especially the youth, are missing out on traditional models.
“Koa offers easy, hassle-free savings and investment platform, with low deposit minimums, generous interest rates, and a user-friendly interface with goal-based savings, that can also be integrated with other tech solutions their customers know and trust,” she says.
She decided to join hands with known fund managers because there were no regulations for her kind of innovation. However she plans to get approvals from the regulators to diversify investments and offer higher returns.
Koa has collected Sh1 million in deposits in two weeks since launching its fund in partnership with Britam and has signed up 5,000 users.
It also plans to launch a second product with Sanlam which has been undergoing market testing at the Capital Markets Authority sandbox.
Kenya has been a market leader in mobile inventions and the market has been quick to embrace investment options on a retail scale.
The government’s mobile money bond M-Akiba managed to raise Sh1.04 billion from five Bond Issues attracting a total of 582,572 registrations in a strategy to attract Wanjiku by lowering bids to as low as Sh3000.
The retail bond with a coupon rate of 10 per cent paid semi-annually and a tax-free status in line with other infrastructure bonds was a bargain given the average savings rate has declined to 2.6 per cent for savings accounts in banks.
“Kenyans are willing to put their money in a transparent simple and easy product with safe and easy returns but most retail options have limits on capital required. Products like ours aggregate their funds so the barriers limiting individual investors is not there,” Ms Kidanu says.