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Capital Markets

CBK rolls out mobile bonds platform with eye on mass market

M-Akiba
CBK’s Treasury Mobile Direct will ease transactions of Sh140,000 and below. FILE PHOTO | NMG 

The Central Bank of Kenya (CBK) has rolled out a mobile platform through which retail investors will be able to apply for and trade Treasury bills and bonds.

The government's fiscal agent says the new service will make it easier to process transactions of Sh140,000 and below.

The move could potentially take investing in Treasuries to the mass market by eliminating the friction in the current market infrastructure.

"The Bank is pleased to inform you about the roll-out of the Treasury Mobile Direct (TMD) services, designed to facilitate investment in Government Securities using the mobile telephone," CBK said in a notice to investors.

"To access these services, investors will be required to register for this facility at the nearest Central Bank of Kenya (CBK) Branch or Currency Centre."

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Retail investors have been applying for the debt instruments on physical forms that are delivered to CBK branches and currency centres.

They have had to contact the CBK to confirm if their applications were successful and the amounts they are to pay.

Alternatively, the investors have hired banks to apply for the securities on their behalf. The lenders charge a commission of 0.15 percent of the actual amount invested in a bond or T-bill.

The small investors have also relied on CBK's website and newspaper advertisements for announcements of new T-bill and bond auctions.

The mobile service will now aggregate all these services and others including request of statements and receipt of the cash value of maturing securities.

"For transactions whose amount exceeds Sh140,000 or other prevailing transaction limit, CBK will at its sole discretion determine the best alternative means of disbursing or receiving the funds," the lender of last resort said.

The mobile service is expected to avail to retail investors the same level of convenience that big buyers of treasuries such as banks have been enjoying.

For more than a year now, banks have been placing their bids for treasuries through an online platform.

Retail investors and other nonbank participants had bought a cumulative Sh125 billion worth of treasuries as of January 31, 2020, representing 4.27 percent of the total domestic sovereign debt.

CBK’s Treasury Mobile Direct platform builds on the M-Akiba service which has raised nearly Sh800 million from more than half-a-million investors.

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