Kenya is preparing a new retail bond programme that could allow ordinary citizens to invest in government securities with as little as Sh500. The move is part of a broader strategy by the National Treasury to widen access to public debt instruments and reduce reliance on costly foreign borrowing.
The planned bond, expected to launch from July 2027, marks a major shift in how the government approaches domestic borrowing. It aims to bring millions of small-scale savers into the bond market, which has traditionally been reserved for investors with deeper pockets.
Learning From the M-Akiba Experience
The proposed bond is a reworked version of the M-Akiba retail bond, which debuted in 2017 but failed to gain traction. At the time, M-Akiba lowered the entry threshold to Sh3,000, yet uptake remained weak due to limited awareness, poor customer support, and timing challenges.
This time, Treasury officials say the new bond will avoid those pitfalls. The product will also be rebranded to distance it from the struggles associated with M-Akiba and better align with current digital investment trends.
Mobile Money at the Centre of the New Strategy
A key feature of the new bond is its integration with the Central Bank of Kenya’s DhowCSD platform. This system acts as the country’s central securities depository for government bonds.
Under the new plan, investors will link their mobile money wallets directly to DhowCSD. This will allow them to buy bonds without going through brokers or meeting the Sh50,000 minimum currently required for Treasury bills and bonds.
Officials involved in the project say the goal is to make bond investing as simple as sending money on a phone.
What Small Investors Could Earn
At current market rates, government bonds offer fixed returns of between 12 percent and 14 percent. An individual investing Sh500 at a 12 percent coupon rate would earn about Sh60 in interest per year, before tax.
While the returns may appear modest in absolute terms, policymakers believe the appeal lies in safety, predictability, and accessibility—especially for first-time investors.
Competition From Other Investment Options
Despite the lower entry barrier, the new bond faces stiff competition. Many low-income households prioritize liquidity and may prefer products that allow quick withdrawals. Money market funds, informal businesses, and small trading ventures often promise faster or higher returns.
Treasury officials acknowledge these challenges and say the product design will focus on ease of use, transparency, and investor education.
A Broader Shift in Debt Strategy
The retail bond initiative fits into Kenya’s wider debt management plan. According to Treasury policy documents, the government wants to diversify its funding sources as public debt servicing costs rise.
Beyond retail bonds, Kenya is exploring options such as diaspora bonds, debt swaps, green and sustainability-linked bonds, and local-currency instruments aimed at reducing foreign exchange risk.
Expanding Financial Inclusion
If successful, the Sh500 bond could reshape how Kenyans participate in public finance. By opening the bond market to small savers, the Treasury hopes to deepen the domestic debt market while giving citizens a direct stake in funding government projects.
The coming months will determine whether the redesigned product can succeed where M-Akiba fell short—and whether Kenyans are ready to embrace bonds as part of everyday saving and investing.
This analysis draws on reporting by James Anyanzwa for Business Daily, with additional independent interpretation.
