Bond-buying through cellphones tested in Kenya

LONDON – For the average Kenyan, buying government debt could soon be as simple as paying for groceries at the supermarket: That is, with the tap of a few buttons on their mobile phone.

This is the premise behind a project about to be launched by the World Bank and Kenyan regulators that aims to capitalise on the success of M-Pesa, the east African country’s hugely popular mobile money transfer service.Under the scheme, which is at the beginning of the pilot phase, anyone with a mobile phone will be able to buy Treasury bills, and eventually bonds, offered by the central bank.Would-be investors only need a cell phone line and a subscription to a mobile money service, which will enable telecoms operators to open an electronic account with the Central Bank of Kenya on their behalf.The CDS accounts, as they are known, are a requirement for anyone wishing to take part in debt auctions.’Today, any Kenyan can pay their electricity bill with the phone,’ said Yira Mascaro, who leads the World Bank’s financial and private sector development group in Nairobi that is behind the initiative.’So instead of paying your electricity bill you will pay for the bonds you would have bought and then a small fee would be charged to the mobile money account, much like you do for any transfer.’Low banking penetration in sub-Saharan Africa, where the World Bank estimates only 24 per cent of adults have an account with a formal financial institution, has spawned innovations aimed at improving access to financial services and Kenya has been at the forefront.Around seven in 10 Kenyan adults use mobile money transfer services not only to send and receive cash but to pay utility bills or school fees or make hotel bookings. This compares with about 16 per cent in the rest of sub-Saharan Africa.- Nampa-Reuters