Kenyans to Trade Equities on Safaricom Mobile Phones in 2016

Updated on
  • Residents to use M-Akiba product designed to trade bonds
  • Product to run on Safaricom's mobile-money service M-Pesa

Safaricom Ltd., East Africa’s biggest mobile-phone operator, expects Kenyans to start trading stocks on their mobile phones early next year, using a product it developed to enable customers to buy government bonds, Chief Executive Officer Bob Collymore said.

The service, known as M-Akiba, was introduced in Kenya in September as a way for low-income earners to buy fixed-income securities for as little as 3,000 shillings ($29). The government postponed the start of the service in October after debt costs surged.

“When we designed the product, we designed it for trading equities and then the government came along and they said ‘why don’t we do it for bonds as well,’” Collymore said in an interview in London on Tuesday. “We do intend to trade stocks. I think it will happen early next year.”

M-Akiba, derived from the Swahili word for savings, will run on Safaricom’s mobile-money platform, known as M-Pesa. The service earned Safaricom 32.6 billion shillings in the year through September, up 23 percent from a year earlier and accounting for almost half of non-voice revenue of 68.8 billion shillings. The company is 40 percent-owned by Newbury, England-based Vodafone Plc.

Mobile Economy

More people in Kenya have mobile-money accounts than any other country in sub-Saharan Africa, with ownership at 58 percent, according to the World Bank. More than half of adults who pay utility bills in East Africa’s biggest economy use a mobile phone to do so, the Washington-based lender said in a report in April.

The government had planned to offer 5 billion shillings of infrastructure bonds using M-Akiba in October, before the delay. The government may start using the service before the end of the year, Collymore said.

“It’s for the Ministry of Finance to figure out the timing for that,” he said. “But for them the attraction of this is how do we soak up some of the money which is sitting in the informal sector without having to borrow money in foreign denominations.”

Investors buying bonds through M-Akiba can spend as much as 140,000 shillings and can check statements from their phones. Interest will be paid directly to their mobile wallets semi-annually and secondary trading can take place at the Nairobi Securities Exchange, Treasury Secretary Henry Rotich said in October.

CCTV Project

Safaricom also plans to formally hand over to the government later this month its project with the Kenyan police force, Collymore said. The company completed the installation of 1,800 closed-circuit television cameras in Nairobi and the port city of Mombasa on Nov. 25 and built command and control centers in the two locations, he said. The system, built at a cost of $115 million, has been working since May this year.

Kenya is upgrading security to combat threats posed by Islamist militants, who have killed more than 500 people in the country since an attack on an upmarket mall in Nairobi in September 2013, and deter criminals.

“We await the government’s decision on whether they want to roll it out to some of the other major cities, which we expect they want to do,” Collymore said.

Safaricom shares climbed 1.3 percent to 15.85 shillings on Wednesday, bringing their gain to 13 percent this year.

(Updates with CEO comments on CCTV project paragraph after CCTV Project subheading.)
    Before it's here, it's on the Bloomberg Terminal. LEARN MORE