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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

Kenya turns to mobile bonds to fund infrastructure projects

By Ronald Njoroge  NAIROBI, (Xinhua) -- Kenya plans to increase its reliance on government mobile bonds to fund infrastructure projects, a senior official said on Friday.

Cabinet Secretary to the National Treasury Henry Rotich told a media briefing that the government has so far raised 1.5 million U.S. dollars from a pilot mobile-based government bond in May.

“Moving forward Kenya will increase its use of retail mobile government bonds to finance infrastructure projects because they are a cheaper source of funds for the government,” Rotich said.

“Mobile traded bonds will cost government an interest rate of 10 percent per annum as compared to conventional bonds that cost above 13 percent,” he said during the launch of the M-Akiba mobile government bond that targets to raise 10 million dollars in the next three weeks.

The bond has a green shoe option of raising an additional 38.5 million dollars depending on the public interest.

The bond is unique as it allows investors to invest as little as 30 dollars as compared to the current entry point of 500 dollars for government securities.

Rotich said that the government will continue to issue mobile government bonds either bi-monthly or quarterly depending on the uptake trend and incorporate it into the basket of treasury infrastructure bonds that are issued periodically.

“This way, every infrastructure bond issuance in future will now include a portion set aside for small retail investors,” he added.

Rotich said that the mobile Treasury bond is also part of government plans to expand financial inclusion as it provides a convenient platform for the unbanked population to save.

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