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Need to buy Treasury Bills and Bonds? There's an app for that!

OK, not exactly an App, but investors in Kenya will soon be able to buy T-bills and bonds offered by the Central Bank of Kenya (CBK), as agents of the Treasury, through their mobile phones (with or without a bank account)!

Buying T-bills and bonds through your mobile phone? It's possible! (Credit: kiwanja, Flickr Creative Commons)

This innovative project, led by CBK, with the support of the World Bank, is known as Treasury Mobile Direct. It will aim to extend the use of mobile technology beyond money transfers and broaden the choice of savings products for retail investors. Potential investors will only need a mobile phone line and a subscription to a mobile money service, which will enable telecoms operators open an electronic account with the Central Securities Depository (CDSC) or CBK on their behalf. These accounts are a requirement if you wish to invest in Government debt. The service will include purchase, interest payment and redemption of securities (short-term paper and bonds) through the mobile platform.

Why is the World Bank involved? The financial crisis underscored the importance of developing strong local currency debt markets, which can provide countries with a cushion to keep funds flowing, particularly during periods of reduced bank lending and limited liquidity. Healthy and well-functioning markets can finance priority sectors such as infrastructure, housing and microfinance. Simplifying regulations and procedures for issuing, investing in, and trading securities is a key step towards achieving this goal. This is also in the context of ongoing support from the World Bank to the Government of Kenya on debt markets, capital markets development, and financial markets in general.

Why Kenya? Over the last 5 years, Kenya has recorded the fastest growth in mobile penetration globally. The country already has a very active mobile money market, with mobile penetration just shy of 75% of its population (29.2 million). Also,3 in 4 Kenyans now own a mobile phone. Out of these, 19.2 million customers (66%) currently use mobile money. In addition to having an active mobile money market, there are regulations and safeguards in place to increase user confidence in cyber activities, including an agreement signed between the Communications Commission of Kenya and the International Telecommunications Union to support Kenya’s cybersecurity efforts.

A key objective for establishing Treasury Mobile Direct is to increase access to formal savings instruments, but also to enhance the distribution capacity of the Government of Kenya, which has been trying to reach retail investors without success, even despite lowering minimum investment amounts (see chart below). This is in line with a relatively new trend in the world, including developed economies that have started to tap the retail market in the last few years.

Which instrument will be used for direct distribution to retail investors? The World Bank is working with CBK, CDSC, Kenyan Ministry of Finance, FSD Kenya, and other counterparts on a phased launch of 3 complementary instruments for different target investors (see table below of instruments under study). The Mobile Network Operators also play a key role in the process, as they present the customer interface and are essentially the transaction processors.

The initial services available on your mobile phone in the initial pilot stage will include opening an account, investments, coupon and principal payments, and receiving account statements on demand. In later stages, additional services such as automatic reinvestment, transferability to third parties, and pledging for loans, will become available. (See table below on pilot phase features)

These are yet still early days for the project, however, there is great potential for reaching millions of would-be investors in a cost effective way, broadening access to finance and developing sustainable local currency debt markets.


Amazing - mobile bond transactions are an example of leap frog technology, where an intermediate step is bypassed entirely. The intermediate step in this case is online access to the bond market, a strategy used in the U.S. for series EE and series I offerings.

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