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September 26, 2017

M-Akiba bond misses target by 75 per cent

Nairobi Securities exchange CEO Geoffrey Odundo  during the launch of M-Akiba secondary trading of the special limited offer at  Nairobi Securities exchange on 11/04.2017
Nairobi Securities exchange CEO Geoffrey Odundo during the launch of M-Akiba secondary trading of the special limited offer at Nairobi Securities exchange on 11/04.2017

The second issue of Government retail bond M-Akiba closed yesterday after netting a total of Sh247 million below the Sh1 billion target.

Announcing the results, the National Treasury in conjunction with the Central Depository and Settlement Corporation and the Nairobi Securities Exchange said the bond attracted a total of 303,534 investors in its main offer, out of which 5,988 bought the bond.

The low uptake has been blamed on inadequate awareness among Kenyans on what the offer actually entails.

In an earlier statement to the press, NSE chief executive officer Geoffrey Odundo expressed confidence of the bond hitting the Sh1 billion target before it closes.

However, according to sources from Treasury, emerging rifts between NSE and CDSC are largely to be blamed for the bond’s poor performance.

It is claimed that the NSE and CDSC, being the official marketer of the bond, wanted a three per cent commission of the total sum issued but the Treasury only offered 1.5 per cent. The fist issue of the bond, a special limited offer of Sh150 million, attracted 102,632 investors two days before the set deadline.

“We are happy with the interest M- Akiba has attracted, and look forward to many other firsts. We are keen to utilize the M- Akiba platform to further sustain financial inclusivity.” said the chief executive of CDSC, Mrs. Rose Mambo.

The bond is a three-years infrastructural development issue with a coupon rate of 10 per cent annually, paid bi-annually until the bond matures.

Last month, the NSE announced that it had spent Sh4.8 million to launch the mobile-based bond.

“Fundamentally, M-Akiba has opened an opportunity to stretch the sharing of interest income from Government borrowing to reach even the unbanked population,” the NSE said. “Indeed M- Akiba bond and mobile money in Kenya redefines the meaning of ‘financial inclusion’ and reduces significantly, the proportion of the ‘unbanked’.”

The launch of the bond made Kenya the first country in the world to initiate a retail government bond traded exclusively through a mobile handset.

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