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The Kenyan Government launched M-Akiba to issue retail bonds via the growing mobile money transfer platforms. The money raised helps in funding new and ongoing infrastructure development projects.

The bond is aimed at encouraging a saving and investment culture among Kenyans. Let’s look at the pros and cons of this government bond.

Pros:

1. Unique investments opportunity: Once you register for M-Akiba, you can trade or invest in the government retail bond and make more money. You can also buy and sell government securities in the primary market.

2. Help in building Kenya: Investing in the M-Akiba bond gives you a chance to build Kenya. The money raised through the issue of bonds helps the government to execute the infrastructural development projects at lower costs since their funding has declined.

3. Convenient mode of saving: M-Akiba provides you with a convenient and easy mode of saving money through your mobile device as well as earning attractive interests rates from the government.

4. Opens opportunity for retail investors: M-Akiba opens more doors for more retail or individual to participate in government bonds and build the nation instead of the bonds being left for foreign investors and local institutional investors.

5. Quick investment plan: It is easy to open a CDS account either with the central bank or any other authorized agent. Once you open the account, you can buy the government bond with two days.

6. Better returns than a bank: Investing in bonds gives you better returns than banks. They offer a higher interest rate than the 7% offered by banks. The bond is risk-free and guaranteed saving.

7. Low minimum investment: You can invest as low as KES 3000 and a guaranteed minimum of 150 semi-annually if you invested the initial KES 3000 minimum amount. The more you invest via your mobile platform the more you earn.

8. Reduce external borrowing: Investments through the government bond will reduce external borrowing to support government expenditure projects.

9. Steady and predictable income: M-Akiba promises 10% interest on a semi-annual basis and it is tax-free. During inflation, the bond offer capital investment preservations and enable you to predict income stream.

10. Freedom and control: M-Akiba gives you the opportunity to control your own funds. You have the freedom to invest in whatever amount you want and secure your investments like investing in your children’s education.

Cons:

1. Only works with smartphones: You can only use a smartphone to create an account and purchase the bond. You need to download the mobile app for easier use.

2. Increased bond price: When the interest rate decreases, more retailers can sell their bonds leading to increased bond prices.

3. Confusing user interface: The bond mobile app, had a confusing user interface which was making it difficult to deposit money and purchase the bonds, though currently, it has an improved interface.

4. Fixed returns: Although the bonds offer safety returns to investors, the returns are always fixed and you lose on investing in higher potential gains if you invested in equity.

5. Interest rate risk: Bondholders are directly exposed to interest rate risks. Interests rate affect the value of the bond.

6. Poor customer services: Absence of agents and lack of detailed information about the bond invested lead to low conversion rate. Inadequate customer services also affected the launch of the M-Akiba.

7. Semi-annually interests rate: The 10% per annum interest rate is payable after every six months (semi-annually).

8. Limitations: Each opened M-Akiba account should invest a minimum of KES 3000. The bonds, daily payment limit is KES 140 000.