Kenya is looking at modalities of reducing the cost of trading in the M-Akiba bond on the Nairobi Securities Exchange to boost the liquidity of the mobile-based debt instrument.

This comes after small and retail investors were offered the initial tranche of the Treasury bond amounting to Ksh150 million ($1.5 million) at discounted mobile money payment service fees, with no transaction costs.

The policy decision is meant to promote the uptake of the remaining tranche of Ksh4.85 billion ($48.5 million), with the government planning to use the proceeds of the bond offer to fund its infrastructure projects.

The sale of the Ksh150 million ($1.5 million) bond started on March 23 and closes on April 7. By Thursday last week, Ksh79 million ($790,000) of the issue had been taken up by 68,399 investors, according to data from the National Treasury.

Listed on NSE
It will be listed on the NSE on April 11, setting the stage for the bond to start trading in the secondary market. According to the National Treasury, the bond will start trading at full cost on the NSE, where discounts offered on mobile money payments services by Safaricom and Airtel will be scrapped and transaction costs totalling 0.535 per cent of the value of the transaction reintroduced.

This will see the cost of trading in the bond increase from Ksh17 ($0.17) at the time of buying the bond to Ksh71.05 ($0.71) in trading on the secondary market.

The three-year M-Akiba bond is priced at 10 per cent per annum with interest payable to a bondholder after every six months.

With the overall month-on-month level of inflation above the upper limit of the government’s target of 7.5 per cent, returns to investors could be hurt.

Last year, the National Treasury said plans were underway to offset the costs of trading in bonds through mobile phones as part of efforts to empower small investors and promote a savings culture, currently estimated at 11 per cent.