Only 5,692 investors bought the debut phone-based bond worth Sh150 million whose sale closed yesterday, having met the target ahead of time.
Data from the National Treasury showed that 102,632 people registered on the M-Akiba mobile phone bond platform, but only 5.5 per cent of them actually invested in the inaugural digital paper.
Individual investors bought the bond in different chunks ranging from Sh3,000 to Sh1.13 million, the Treasury said, signalling that the sale was mainly dominated by big buyers and not the small mass market buyers it was meant to serve.
“This leaves the average investment in M-Akiba at Sh26,359,” the Treasury said in a statement.
Safaricom’s M-Pesa platform handled Sh142 million of the total amount while Airtel money sold Sh8 million, underlining Safaricom’s dominance of the mobile money business.
The Sh150 million raised is the first tranche of the bond whose second portion worth Sh4.85 billion goes on sale in June.
The Treasury is banking on M-Akiba to expand its revenue sources from the traditional pool of banks and high net-worth individuals as it prepares to fill its Sh500 billion budget deficit and retire old debts in the next financial year.
Investors can purchase a minimum Sh3,000 worth of the government security through M-Akiba up to a maximum of Sh140,000 a day.
The launch of M-Akiba was hinged on the assumption that the Sh50,000 minimum that has been applying in the government bonds market was way above the reach of ordinary Kenyans.
Buyers of the bonds also needed to have a bank account and to visit Central Bank of Kenya to open an account and apply for bids.
The Treasury was also hoping that the 10 per cent tax-free interest rate, higher than the seven per cent offered by the banks, would attract more Kenyans to invest in the virtual bonds.
The government, through the National Treasury, in November 2015 appointed the CDSC to offer agency services for the bond.
The CDSC is facilitating the creation of M-Akiba CDS accounts as well as processing of applications in the primary market.
It is also offering registrar services, as an agent of the Central Bank of Kenya, to create a register of bond holders, manage the coupon payments and redemption of the bond at the end of the three-year term.
Other players are Capital Markets Authority, the capital markets regulator, Safaricom and Airtel as mobile network operators, and the Nairobi Securities Exchange (NSE) where the bond shall be traded and listed.