M-Akiba: How to Invest in Government Bonds in Kenya

  • While most of us may know the importance of opening a savings accounts, only a small number of people have these accounts and even fewer actually use them regularly. 

    This might be because the interest earned on these accounts is often zero and transaction costs (such as withdrawal fees, minimum balances, or the distance a client needs to travel to reach a branch) are also high.

    As a result, the Kenyan government launched M-Akiba in 2017 to encourage people to save and earn high returns.

    Other than being one of the most attractive savings product available to the average Kenyan, it also gives you access to a gold standard capital market financial product that was previously beyond the reach of many Kenyans. 

    This article will take you through the ins and outs of investing in government bonds through the M-Akiba.

    What is M-Akiba?

    M-Akiba is a unique opportunity for Kenyans to save money, while at the same time earning very attractive interest rates from the Government.

    M-Akiba is a retail infrastructure bond issued by the Government of Kenya seeks to enhance financial inclusion for economic development. 

    It is a product by the government of Kenya through the Central Bank of Kenya (CBK) under the National Treasury in collaboration with Nairobi Securities Exchange (NSE), Central Depository Settlement Corporation (CDSC), Mobile Network Operators, and Kenya Association of Stock Brokers & Investment Banks (KASIB).

    The money raised from the bond will be used for funding of government infrastructural development projects, both new and on-going. 

    Further, the M-Akiba bond is also aimed at enhancing the savings and investment culture by Kenyans. 

    Kenyan savings is at 11% of GDP while countries like Qatar are at 60%, while Rwanda and Uganda are at 22% each. 

    What is a bond?

    A bond is a loan between a borrower and a lender. 

    The borrower promises to pay the lender interest every six months at a future date. 

    The borrower also promises to repay the initial money given by the lender at the end of the agreed period.

    A bond is usually longer than one year is issued by the borrower to raise money for a particular purpose.

    What are the benefits of investing in M-Akiba retail bond?

    1. M-Akiba Bond is a low-risk savings/investment product as it is backed by the financial might of the government.

    2. Its minimum investment amount is Ksh 3,000 compared to the Ksh 50,000 minimum amount expected of investors buying the other government bonds. M-Akiba is therefore very affordable.

    3. It is also the first bond to be traded through the Mobile phone.

    4. It is a steady source of interest income paid every six months.

    5. The interest income is tax-free. That is, no taxes are paid on it whatsoever.

    6. You have a guaranteed exit option. That is you can sell the bond at any time should you need to at any time.

    7. It is an effective way of saving money for the futures it earns a strong return.

    8. Very convenient to acquire and dispose of given it is all mobile based.

    9. It is confidential and secure.

    10. You can transact from anywhere and at any time. 

    11. The interest rate for this bond is 10% per year and it is fixed. 

    12. You participate in nation building directly as the bond’s funds are put to developing the nation’s infrastructure thus boosting economic growth and the future prosperity of Kenyans everywhere. 

    Who can buy the M-Akiba bond?

    The M-Akiba bond is open to Kenya’s citizens who have attained legal adult age of 18 years and are in a possession of mobile money enabled phone, in this case, Safaricom’s M-Pesa or Airtel’s Airtel Money, a duly registered line and a valid National Identity card. 

    The M-Akiba bond is guaranteed by the Government of Kenya. 

    How to Register For M-Akiba CDS Account

    Note: You have to open another CDS account for M-Akiba even I you already have one.

    1. Dial *889#

    2. Then choose option 1- English

    3. Then choose option 1- MAKIBA MK01

    4. Then choose option 1- Register

    5. Then enter the ID number to register your mobile money.

    6. Then enter a preferred PIN( your choice of PIN)

    7. Confirm preferred PIN( Confirmation of your choice above

    8. Choose option 1 to accept Terms and conditions.

    9. Then wait for 5 minutes your account to be active and a confirmation notification for the registration.

    10. For pesalink registration ensure you are registered for M-Akiba.

    How to buy M-Akiba Bonds on your Phone

    1. Dial *889# on Safaricom or Airtel

    2. Choose option1- English

    3. Choose option1 – Govt of Kenya

    4. Choose option 1 – MKAKIBA MK01

    5. Enter PIN

    6. Select option 1- Buy

    7. Amount- Kshs 3,000 being minimum

    8. Select option 1-confirm

    Note: The process of buying and selling bonds takes place in real time. You may, however, experience some delays depending on the network coverage in your area. 

    When you sell your bond you will receive your money immediately in your mobile money. For those who will have used PesaLink payment channel, their money will be credited into their bank account. 

    You can buy the bond even after the close of an offer in the secondary market (Nairobi Securities Exchange).

    The amount you receive will include any accrued interest earned but will be less the mobile money/ PesaLink charges and statutory levies. 

    How to buy M-Akiba Bonds via Pesalink (Through your preferred bank)

    1. Select Pesalink option

    2. Choose send money to phone option

    3. Type 889 as the phone number

    4. Enter the amount of bond

    5. Under reason for payment/narration enter ID number and then Submit.

    6. You will receive an SMS confirmation for Pesalink and respective bank and a confirmation message from CDSC confirming your buy.

    7. To track your investment simply dial *889# and go to the “My Account” menu, you will be able to view your statement.

    What is the minimum amount of bond you can buy?

    The minimum amount of the Bond an investor can buy per transaction is Kshs3,000 worth of the bond.

    Thereafter, one can buy in the multiples of Kshs500.00 per day until the full amount on offer is exhausted.

    There are no restrictions as to how much an investor shall buy in the secondary market.

    What is the limit of buying the M-Akiba bond?

    If you choose to use the mobile money payment channel, daily allowable limits of Ksh140,000 per investor per day shall apply.

    However, if you use Pesalink, the maximum transaction limit is Ksh 999,999 per transaction.

    Daily transfer limit is depended on your bank account balance. 

    When does the M-Akiba bond mature?

    The maturity period of this Bond is three (3) years; meaning that you will be paid back your initial investment amount called the “principal” after three years in addition to the annual interest payments you will receive throughout the three year period. 

    M-Akiba Contact Information

    In case of any queries, you can contact or visit the nearest Huduma Centre or call their official number: 0206900020. 

    Email:  info@m-akiba.go.ke

    Website: www.m-akiba.go.ke.