Kenya to use mobile government bond to boost savings rate
Kenya plans to use its mobile government bond, M-Akiba to boost the savings rate among its citizens, a senior government official said on Tuesday.
Cabinet Secretary in the National Treasury Henry Rotich told a media briefing in Nairobi that the country's saving rate currently stands at 12 percent of the Gross Domestic Product (GDP) compared to 25 percent in the developed world.
"The M-Akiba, which is an exclusively mobile phone traded bond, is undoubtedly one of the most powerful savings vehicles for Kenyans given that it provides an annual rate of return of ten percent tax free of the amount invested," Rotich said.
"The low entry point of 30 U.S. dollars as compared to the current minimum of 500 dollars to trade in any government security is aimed at ensuring that as many Kenyans as possible save through participating in the bond," he said during the occasion of ringing the bell at the Nairobi Security Exchange to mark the start of the secondary trading of the special limited offer of tha 1.5 million dollar M-Akiba.
Last month, the east African nation launched the 1.5 million dollar bond which has already been fully subscribed.
In June, the government will launch the main 48.5 million dollar M-Akiba bond program. Rotich said that Kenya's capital markets are currently dominated by institutional and foreign investors.
"So, the M-Akiba is expected to encourage a strong savings culture by giving retail investors access to a gold standard investment opportunity that has always been beyond their reach," he added.