The Commercial Bank of Africa, Kenya’s largest privately-owned lender, has agreed to make a market for the country’s debut mobile phone-based bond M-Akiba, the Treasury said yesterday. The deal by the bank, largely owned by the Kenyatta family, guarantees investors an exit whenever they need it.
The National Treasury raised Sh150.04 million in pilot sale that was launched on March 23, becoming the first in the world to issue a government bond exclusively via mobile phone.
“They (CBA) will be the buyer to every seller and a seller to every buyer,” Nairobi Securities Exchange chief executive Geoffrey Odundo said. “It has an automatic exit. Should you wish to exit there is no hesitation.”
CBA’s status as a market maker for the new bond followed negotiations with the government. Neither parties disclosed the costs of the provision of liquidity for the three-year life of the bond.
“We are giving very competitive market rates. CBA will effectively play its role as the liquidity provider in the secondary market of the Sh150 million special limited offer,” CBA Group executive director Martin Mugambi said during the listing of the bond on the NSE.
CBA was the first to start offering saving and lending products on mobile phones. In 2012, it launched M-Shwari on the M-Pesa mobile cash platform, owned by telecoms operator Safaricom.
More than Sh150 billion has since been lent to customers on M-Shwari since then in Kenya and in neighbouring nations where CBA operates, the bank said.
President Uhuru Kenyatta is expected to launch the second tranche of M-Akiba worth Sh4.85 billion in June.
The Capital Markets Authority has said it is putting up a regulatory framework to bring more liquidity providers.
“We want to ensure there is a competitive platform. The conversations (with other banks) are ongoing,” CMA director for policy and strategy Luke Ombara said. He, however, did not disclose the banks the government was in talks with.
Treasury public debt management director-general Wohoro Ndohho said other mobile issues would follow.
“We do not envisage this as a one-off. This has to be a permanent part of our financial sector infrastructure to make sure the average Kenyan gets an opportunity to participate,” Ndohho said at a bell ringing ceremony.
About 108,000 Kenyans have registered on their mobile phones to invest in M-Akiba since last month.