When Safaricom pioneered the mobile money technology in the world by launching M-PESA, it was evident that it was going to revolutionize the concept of virtual money. True to this, this technology has been adopted by many companies in the world and they are growing in leaps in bounds. This platform has made it possible to transact between individuals, corporate and recently the government. Since one is required to pay only a small fee to transact, low income earning citizens have also been considered which makes it technology for all.
Traditionally, the government has raised money through bonds which are floated and transacted through financial institutions such as banks. Any member of the public willing to purchase these bonds was required to open a depository account by visiting the Central bank of Kenya or by using the services of a broker. The minimum amount was previously set at Kshs. 50,000. People without bank accounts and the low income earning Kenyans were locked out by these constraints. Bond transactions were left to institutions and high income traders. Now the kawaida people will be able to buy bonds through their phones as the government has rolled out the much anticipated infrastructural bond dubbed M-Akiba where Kenyans will be able to transact from the comfort of their mobile phones. This initiative will be beneficial to Kenyans in the following ways:
Kenyans will save more
There are many investment ideas and opportunities in Kenya but many people, especially the low income earners, are skeptical about them due to the high risks involved. This makes them hold onto their money for fear of losing it. Instead of saving or investing, they end up consuming the money which leaves them worse off than they were before. With this kind of initiative, the government hopes that Kenyans will change their perspective on saving and put their money in this venture that is associated with low risks and guaranteed returns.
Embrace and boost innovation
This whole plan is based on innovation which was not previously available. The idea of mobile money transfer has been widely accepted and where the government has adopted its use, it’s a huge boost to innovators who are guaranteed of market to their products and services. Again, it is fulfillment of the government’s promise of digitizing its services to Kenyans.
Encourage individual investment
The bond market in Kenya has been dominated by institutional investors both locally and globally recognized. The place of the individual investor has been limited as a result of this domination. However, this is set to change. Individual investors will be able to participate in this market as they are required to pay the minimum fee of 3000 to purchase the government bonds.
Safaricom dominates the telecommunication industry and the fact that the government has used the M-pesa platform for its transactions means that around 23 million Kenyans who use the platform are potential investors. This high participation by many Kenyans will translate to high economic empowerment to all who will decide to put their money in this venture. Unlike the scenario where purchase of bonds was limited to two days, the M-Akiba bond is more flexible where there is instantaneous purchase thus investors are flexible to invest with minimum ease and free from the pressure of beating the deadline.