M-AKIBA: How does it work? Here’s all you need to know.


The National Treasury recently launched M-AKIBA, the World’s First mobile platform for trading government treasury bonds. For only KES 3,000 anyone with a mobile phone and a national ID can invest in it. Here is all the information you need to understand how this new innovation works before you can decide to jump in.

The launch that was just made the other day was for the pilot program only, in fact they are calling it a mini launch. The target for the pilot program is KES 150 million. After three months, the main launch of M-AKIBA will occur, it will be spearheaded by the President himself and will target a whopping KES 4.85 billion bond to make the total collection to reach KES 5 billion.

This money is basically a loan to the government, it allows the nation to conduct projects and then pay back the money with interest. Traditionally, only the rich were allowed to buy these treasury bonds, this is because the minimum limit was as high as KES 1 million. With time, the limit lowered up to KES 50,000 until M-AKIBA dropped it to KES 3,000, most Kenyans can afford this kind of investment; that is the attribute that makes this initiative so unique. M-AKIBA is a straight bond which means it pays at regular intervals.

M-AKIBA will primarily be done on mobile systems of MPESA and Airtel Money. The minimum investment is KES 3,000 and a maximum of KES 140,000 per day due to the limitations of this mobile cash transfers.

To invest, you simply register yourself by pressing *889# and following the steps. Any phone can access this process be it a smartphone or a simple feature phone. Your investment will be earning you a coupon rate, also called interest rate, of 10%. These earnings will be paid twice a year, so that’s every 6 months. Upon maturity of the bond, you will get your principal back (your initial investment) plus your interest earnings. So if you invested KES 3,000, upon maturity of the bond, you will get back your 3000+ interest earnings of 300 for every 6 months you waited. If you had saved in a bank, you would only earn between 2%-7% interest; so bond rates are more attractive. However, interest rates of M-AKIBA can go lower than this.

Paul Maina Head of Research at Relic Capital was talking to Daily Nation and said that, bonds are inversely proportional to the prevailing interest rates. That is, if interests go down, the bond price goes up and vice –versa. He continues that, interest might go down to 7% if the bond price increases to 14%. So if you invest 3,000, you will only earn 210 every six months. Since M-AKIBA bonds can be bought or sold at any time of the day, Maina foresaw a future where Kenyans might sell away their bond if the interest rates decrease. At such a time, the price of the bond will be high.

Now you are well informed of the M-AKIBA platform, is it something that interests you? It’s your chance to decide and respond accordingly.