NAIROBI, Kenya- The Central Bank of Kenya (CBK) is set to revolutionize the investment landscape for small-scale investors with the introduction of the ‘hustlers’ bond’ platform.
This initiative will allow Kenyans to invest in government securities with as little as $5 (Sh664), significantly lowering the entry barrier for retail investors.
The CBK has earmarked funds in its budget to cover the costs associated with the Request for Proposals (RFPs) for consultancy services, focusing on the post-implementation review of the hustler bond system.
This move is aimed at democratizing access to Treasury securities, which traditionally required higher investment thresholds.
“The introduction of the hustler bond system by the Central Bank of Kenya is expected to enhance market growth and stability by broadening investor participation and increasing demand for Government bonds and bills,” stated the Capital Markets Authority (CMA) in its latest Soundness Report .
Currently, Treasury bonds, including infrastructure bonds, require a minimum investment of Sh50,000, while Treasury bills demand at least Sh100,000.
The new hustler bond system will significantly lower these thresholds, making government securities accessible to a wider audience.
This initiative follows a directive from President William Ruto, urging the CBK to reduce the threshold for investing in government securities to attract more private investors.
Despite the high yields offered by the government on long-term instruments, there has been a lack of increased investor numbers, reflecting concerns about Kenya’s economic stability and fiscal health .
For instance, in July, the government aimed to raise Sh20 billion through a re-opened bond issue but managed to collect only Sh487.5 million.
Investors have shown a preference for short-term Treasury bills, anticipating higher interest rates in the near future.
In tandem with the hustler bond, the CBK plans to reactivate the M-Akiba program. Changes to M-Akiba, a mobile-based bond purchase platform, were implemented in June to prevent it from being traded on the secondary market.
This revamp aims to eliminate unnecessary transactions and commission-chasing brokers, which have hindered its performance.
A study commissioned by FSD Africa recommended reviewing the M-Akiba trading platform to boost efficiency and cut costs such as broker fees.
“The National Treasury is currently undertaking M-Akiba issuance re-engineering process with the support of E-citizen Directorate to further deepen the Government securities at the retail level,” the Treasury noted.
Additionally, over a million dormant share accounts on the Nairobi Securities Exchange (NSE), frozen in 2019 to prevent fraud, have been reactivated.
This policy change aims to enhance market fairness by allowing all accounts to trade, thereby boosting trading activity and revenue for the NSE, Central Depository and Settlement Corporation (CDSC), and brokers .
The launch of the hustler bond platform by the CBK is poised to democratize investment in government securities, offering retail investors unprecedented access to Treasury bonds and bills.
