Investors who bought into the mobile-based infrastructure bond, M-Akiba, last year are struggling to find buyers of their holding, Treasury secretary Henry Rotich has said, citing market data.
Secondary trading in the three-year bond on the Nairobi Securities Exchange is characterised by net sales, Mr Rotich said, a pointer that investors were looking at shorter gains which is common with retail investors.
As a result, he said, there was need to issue M-Akiba bonds which mature in less than three years to “cater for investors who prefer the short end of the market while providing for the long investment demand”.
“The National Treasury is considering a programme-based model of issuing multiple tenors of the M-Akiba products to cater for the diverse demands of retail investors,” Mr Rotich said during release of a survey by UK government-backed Financial Sector Deepening Africa on last year’s low investment in M-Akiba by 303,534 investors.
“We are looking forward to implementing these changes in the next fiscal year if the market conditions remain favourable.”
Latest market data shows the value of sales in the Sh150 million pilot M-Akiba bond on the Nairobi bourse stood at Sh19.08 million on June 6 compared with buys at Sh9.66 million.
The Treasury last year raised Sh397.47 million out of the Sh5 billion it targeted from sale of a three-year bond via a mobile phone for infrastructure development, making Kenya the first country in the world to borrow exclusively from a mobile platform.
Mr Rotich further said there was need to review the issuance framework of the M-Akiba bond to cut transaction and marketing costs, estimated at more than half of the value of the transaction, on both the Government and the investors.
Rose Mambo, the chief executive of the Central Depository and Settlement Corporation (CDSC), stressed the need to develop a self-sustaining system for issuance of the M-Akiba similar to the one used for an initial public offering (IPO).
Heavy financial donations and goodwill from partners such as Nairobi Securities Exchange and the CDSC, she said, made it difficult to determine the actual cost of the government borrowing cash from the masses via a mobile phone.
“As we think about the next issuance, we really need to be concerned about the actual cost of issuing the M-Akiba bond. It is also a kind of a chicken and egg situation because one thing that will make it sustainable is having additional people buying the bond, but how much marketing effort do we need to put in to achieve that?” Ms Mambo said.
Unlike conventional bond issues where minimum investment is Sh50,000, the M-Akiba allows investment from Sh3,000 through Safaricom’s #ticker:SCOM M-Pesa, Airtel Money and interbank money transfer platform, PesaLink.
The M-Akiba bond, which seeks to mobilise cash from the public for infrastructure development thus driving growth in national savings, offers an annual return of 10 per cent, payable after every six months.