State mulls over new platform to allow 'hustlers' invest in Treasury bonds and bills

Investing in government securities such as bonds will soon not just be a thing for the rich, as the government through the Central Bank of Kenya has unveiled a plan to establish a new bond platform for 'hustlers'.

Seeking to onboard retail and small-scale investors to the bond market, the platform will allow them to acquire government securities for as little as $5 (Sh655).

According to the Capital Markets Authority (CMA), the new investment opportunity is expected to grow access to the treasury instruments hence expanding the capital market.

Further, it notes that the apex bank has solicited offers for consulting services for the pre-and post-implementation examination of the intended platform known as the "hustler bond system".

"It has set aside funds in its budget toward the cost of Request For Proposals (RFPs) for provision of consultancy services for hustler bond post-implementation review," CMA says.

The establishment of the hustler bond system comes in the context of the government's drive for a lower entry level for ordinary investors in Treasury bills and bonds.

"This followed a directive by President William Ruto that sought the CBK to decrease the threshold for investing in government securities to accommodate a larger pool of private investors," CMA adds in part.

Treasury bonds, including infrastructure bonds, have a minimum investment requirement of Sh50,000.

The bonds are long-term debt securities issued by the Treasury to help finance government spending.

On the other hand, treasury bills, which mostly differ from bonds in their shorter term, need a minimum of Sh100,000.

Market growth and stability

The capital markets regulator reiterates that the introduction of the "hustler bond system" by CBK to lower the entry barrier for retail investors into Treasury securities is expected to enhance market growth and stability by broadening investor participation and increasing demand for government bonds and bills.

Notably, despite high yields issued by the government on its long-term instruments in the recent past, they have failed to record increased numbers.

This arguably reflects investor concerns about Kenya's economic stability and fiscal health or its ability to meet debt obligations.

For instance, the government this month once again failed to hit its target in a bond sale as a result of a standoff with investors over interest rates that saw the government raise just under a third of its targeted Sh30 billion.

The bond sale of re-opened 10- and 20-year papers first sold in March 2024 and June 2008 respectively raised bids worth Sh14.68 billion, out of which the CBK took up to Sh9.76 billion.

The about 50 per cent under-subscription and the subsequent rejection of a third of the bids indicated a standoff between the regulator and investors over rates.

In the new plan, the Central Bank is also planning to reactivate the M-Akiba programme.

M-Akiba is a retail infrastructure bond issued by the government which seeks to enhance financial inclusion for economic development.

The money raised from the bond initially was mandated to fund the government's infrastructural development projects, both new and ongoing.

Further, the M-Akiba bond was also aimed at enhancing the savings and investment culture of Kenyans.

In June, the Treasury made changes to M-Akiba, the mobile-based bond purchase platform that ensured it would no longer be traded on the secondary market.

This was among the new changes as the Treasury revamps the product to eliminate windy transactions and commission-chasing brokers long blamed for its dismal performance.