M-Pesa cash limit to go up after Sh3,000 mobile bond opens

M-Pesa is market leader in mobile money business. FILE PHOTO | NMG
M-Pesa is market leader in mobile money business. FILE PHOTO | NMG 

Plans are in the offing to raise the daily mobile money transaction ceiling from the current Sh140,000 to accommodate higher purchases for a government bond exclusively sold via mobile phones.

Treasury Cabinet Secretary Henry Rotich said the move is aimed at allowing those with a higher ability to buy the mobile phone-based bond, called M-Akiba, as the daily limitation may lock them out of the new investment.

The exclusive sale of bond through 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 don’t have a bank account.

“We are discussing with Central Bank of Kenya to see to what extent we can increase the daily limit to a higher amount to allow higher purchases,” said Mr Rotich at the launch of the bond.

“This is one way to allow as many Kenyans as possible to participate in Treasury bills, promote financial inclusion and boost our infrastructure financing,” he added.

The government made a limited offer of Sh150 million to test the system before a bigger offer of Sh4.85 billion planned for June.

Investors can buy the bond for as little as Sh3,000, earning a tax-free interest of 10 per cent. They will be able to trade it on the secondary market.

Treasury indicated that more than 200 investors had put in about Sh1 million within an hour of the start of the sale.

Minimum investment

Few ordinary Kenyans bought government bonds, put off by the minimum investment of Sh50,000 and the need for a commercial bank account.

Mr Rotich said the 10 per cent interest rate offered by M-Akiba, higher than 7 per cent for bank deposits, could drive demand.

M-Pesa, which is the largest mobile money platform, increased single day transaction limits from Sh35,000 in 2010 to Sh50,000 before the limit went up to the current Sh70,000.

Currently, one is allowed a maximum account balance of Sh100,000 but the daily transaction is capped at Sh140,000.

The CBK limits on e-payments amounts are aimed at curbing money laundering and fraud, but the new product may force further extension on the daily limits.