By Shubhra Agrawal
Kenya is one of the most advanced economies in Africa and now comes under the middle-income strata. The Kenyan government has successfully remodelled the economy in recent years, increasing the nominal gross domestic product (GDP) by 25 percent to USD 55 billion. An important factor in this growth is said to be the shift of focus towards a digital economy. There has been an emphasis on fast-track planning and implementation of information and communication technologies in an effort to increase the efficiency of services.
Kenya is a country where people are ready for a major shift to cashless transactions. A Deloitte study found that Kenya is way ahead of its African peers in the use of mobile money transfers. 33 percent of its population make use of mobile money transfer platforms compared to Nigerias 11 per cent, South Africa’s 15 percent, and Zimbabwe’s 11 percent.
M-Akiba: Kenya’s mobile platform to mobilise money
After a delay of two years, the Kenyan government released its mobile based auction platform, M-Akiba. The aim of the platform is to make the government bonds accessible to common people. Currently, only 2 percent of government bonds are traded by individual investors, as opposed to institutional investors. Investors with small amounts of cash can now easily lend their money to the government. They will be paid a semi-annual 10 percent interest rate, which would lead to distribution of potential customers among banks and the government.
The government aims to encourage people to save more through this platform. This scheme also helps the government raise a large amount of cheap capital to support infrastructure plans . However, Kenya needs to lower its budget deficit, which expanded to 9.6 percent of GDP in 2016. Towards this endeavour, the government plans to raise 154 shillings (USD 1.5 billion) from external borrowing this financial year. This of course means many more bonds will be traded on M-Akiba, creating more opportunities for Kenyans to invest and in turn, mobilise their cash.
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