The National Treasury is drawing up plans for a revamped retail bonds scheme that would allow Kenyans to invest with as little as Sh500, part of a broader strategy to expand the domestic debt market and cut back on costly foreign commercial borrowing.
The proposed product is a reworked version of the ill-fated M-Akiba bond, which debuted nine years ago with a minimum entry point of Sh3,000 and failed to gain traction. By contrast, investors in the conventional Treasury market currently need at least Sh50,000 to purchase Treasury bills or bonds.
The new retail bond programme is pencilled in for launch from July 2027 and would open the government securities market to small-scale investors, offering fixed returns currently ranging between 12 percent and 14 percent. A Central Bank of Kenya official involved in redesigning the failed M-Akiba initiative said the new structure will integrate mobile money platforms directly with the DhowCSD online system, enabling investors to buy bonds without intermediaries.
The official explained that the retail bonds will be fully embedded within DhowCSD, the country’s central securities depository, meaning all bond transactions will be routed through the same core infrastructure that supports the wider government debt market. The framework is still being finalised, but the intention is to correct the shortcomings that undermined M-Akiba.
Efforts to obtain comment from Treasury Cabinet Secretary John Mbadi, Principal Secretary Chris Kiptoo and Public Debt Management Office director-general Raphael Owino were unsuccessful, with calls and messages going unanswered.
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At a 12 percent coupon rate, an investor who commits Sh500 would earn about Sh60 a year before taxes. Even so, the plan faces stiff challenges, including the cash-flow needs of low-income households, competition from money market funds, and the often higher returns available in informal businesses such as trading and services.
M-Akiba, launched in June 2017, struggled due to poor timing, limited public understanding, and weak customer support. Despite lowering the minimum investment threshold, successive auctions were heavily undersubscribed. To avoid that baggage, the new retail bond will be rebranded, effectively distancing it from the M-Akiba name.
While the underlying product remains a government bond, officials say lessons from the earlier failure will inform the redesign, with a focus on making the offering more relevant to today’s investors and seamlessly accessible through DhowCSD. In its draft medium-term debt management strategy, the Treasury has signalled it will pursue innovative financing tools to plug budget deficits and rein in public debt.
