A new study by the Financial Sector Deepening (FSD) Africa has revealed that poor timing was one of the prime reason government's M-Akiba bond failed.
M-Akiba was officially launched on June 30, 2017 to much fanfare and great hopes that the Kshs1 billion on offer would also sell out and even allowed for an initial Kshs3.8 billion to be sold. Over 300,000 people registered on the M-Akiba platform but only 5,988 purchased M-Akiba bonds during the official launch totaling to KShs247.75 million, only about a quarter of the KShs 1 billion on offer. This even included an extended time period to allow for some of the complications caused by the election period.
In the study, the researchers say that messages meant to enlighten the public were swamped by election coverage, hence it was hard to be noticed by the target audience. The study also discovered that there were poor customer relations whenever need arose to set the records straight.
"The only helpline available to customers, many of whom did not fully understand the product, was a landline, which was difficult to access and confusing, given the mobile nature of the product. Furthermore, when fraudulent messages circulated about the product, there was no easily accessible customer service available to refute them," states the report.
FSD notes that purchasing process was also complicated for most people. They state that while registration was simple, the second stage of the process was confusing and gave no clear, immediate instruction for how to complete the purchase. Moreover, screenshot displays were sometimes misleading and/or confusing so individuals may not have realised their purchase was not complete after registration.
Although investment did not meet expectations, the post issuance study found that the product was fairly successful in bringing a new broad-based retail investor group into the market for government paper. 85% of customers had never bought a bond before and buyers were distributed across virtually all of Kenya's 47 counties. Most of the investors (84%) really liked the product and were likely to recommend it to someone else and 80% of those who invested were likely to invest again, if the product was issued today.
"Despite not living up to its own ambitions, M-Akiba still stands as the first mobile treasury instrument to be sold in Africa. Although the first pilot and launch did not achieve desired outcome, there are significant opportunities to enhance the product in Kenya and replicate elsewhere drawing on the lessons and recommendations made from the post-issuance study and the lessons learned by the implementers to make it more relevant to the daily reality of citizens aiming to invest in their futures," concludes the report.