Capitalizing on the popularity and success of mobile money transfer services in the country, investors in Kenya will now be able to buy government debs including treasury bills and bonds using mobile phones.
This follows a project dubbed the Treasury Mobile Direct started by the Kenyan government — through the Central Bank of Kenya (CBK) — in partnership with the World Bank.
The project, still in pilot stage, seeks to encourage individuals to adopt a savings culture as well as increase participation in the bond market, which is currently less than 3 percent.
“Today, any Kenyan can pay their electricity bill with the phone,” said Yira Mascaro, who leads the World Bank’s financial and private sector development group in Kenya’s capital, Nairobi.
The new service, set for launch in six months, will require Kenya’s mobile telephone service operators to open an electric account with the CBK.
The accounts, popularly known as CDS accounts, are a requirement for anyone looking to take part in debt auctions. CBK says, the accounts will allow users to buy Treasury bills, and eventually bonds it offers.
Once complete, the project will first target bank account holders while the second phase will target the unbanked.
Banking penetration is estimated at only 24 percent of adults, according to CCK. This has seen a series of innovations hitting the Kenyan market in a bid to reach out to the left out population. CBK aims to use the mobile platfform to encourage banking in the country. Mobile penetration in Kenya has reached 71.3 percent in the last quarter of 2011, says CCK.
The service is expected to be the first of its kind in Africa. Other governments have tried to offer government debt to retail investors via the Internet without much success.