The development of M-shwari was partly driven by Safaricom’s finding that mpesa was not only being used as a primary mode of money transfer, but as a repository of cash. M-Pesa users were storing cash on the virtual system, foregoing immediate financial needs for future use. M-Pesa gave rise to M-Shwari which has now given rise to M-Akiba. Last week I wrote that we would eventually see the true use of the M-Akiba product since customers hire your product to do a job and, in some cases, that job is remarkably different from what the product developers intended.

The closure of the bond on April 5th, five days earlier than the targeted date of April 10th 2017, generated a taste of what is to come in terms of product usage. The media release from the Treasury stated that out of 102,632 people who registered on the platform, only 5,692 investors bought the bond. I must add a rider here: I registered for M-Akiba but found the system down for over 24 hours, which prevented my bond purchase. That would definitely have been one reason for the low conversion rate of registered investors to actual investors. But here’s the fly in the “small-scale saver” ointment: the bond was bought in varying amounts ranging from Kshs 3,000 to Kshs 1.13 million.

Now let’s assume that the Kshs 1.13 million investor was a Safaricom subscriber named Moraa. Since the maximum daily transaction on the Mpesa platform is capped at Kes 140,000, Moraa would have had to undertake 8 transactions over 8 days to make this investment. Moraa is not Wanjiku the small trader. Moraa is quite likely a mid sized business person or well paid employee looking for an easy way to park cash earning 10% per annum tax free interest. Remember that investing in government paper today requires reams of paper and kilos of perseverance.

Let me demonstrate by quoting from the Central Bank of Kenya website: “The first step to investing in Treasury Bills is to open a CDS Account with the Central Bank. To open a CDS account you need to hold a bank account with a Kenyan commercial bank. You must fill out a mandate card in neat block letters. You’ll need to provide contact information and information about your commercial bank account. You’ll also need to have two signatories from your commercial bank sign the card to verify the information you’ve provided. [Please pause for a commercial break at this point to catch your breath. Ok back to the column] You’ll also need to submit a passport-sized photograph of yourself which has to be certified and stamped by a representative from your commercial bank. Finally you’ll also need to submit a clear copy of your National Identity Card, passport or alien certificates.”

How many times did you count the words “need to” in that excerpt? M-Akiba has opened the delightfully secretive Pandora’s box of disposable cash that is unrepentantly and very reluctantly placed in commercial banks. I am hazarding a guess that pseudo-savvy Kenyan investors (and we have an insatiable penchant for investing as the various land, Sacco and Ponzi schemes have demonstrated) will park their cash in the bonds and drive demand for liquidity on the secondary market in order to convert the medium term investment into cash where needed. The opportunity here is for the brokers who will provide a release for that cash against a profit induced discounted purchase price, or the bankers who will allow the investor to leverage that investment and borrow against that virtual security. If a vibrant secondary trading or securitization market emerges, as is wont to given the iterative product development that mobile money in Kenya has inculcated, M-Akiba will quickly become an excellent funds placement alternative to middle class and wealthy Kenyans. A hawk-eyed compliance approach will have to be applied as well, since an unintended consequence of such iterations would be to produce an easy way to launder large amounts of cash outside of the closely watched banking system. Wanjiku the “mama mboga” may have been M-Akiba’s target, but Moraa “the hustler” will be the ultimate beneficiary.