More than 80,000 new investors have signed up on the digital trading platform for government debt securities hosted by the Central Bank of Kenya(CBK), marking a double growth since July 2023 when the platform debuted.
Dubbed DhowCSD, the system which went live on July 31 is an upgrade of the Central Securities Depository(CDS) infrastructure to boost efficiency in investing in government securities.
“When we went live with DhowCSD, at that time, we had 40,000 accounts, as we sit here, the number of accounts is anywhere between 80,000 and 90,000. In less than a year, the accounts have increased by 100 percent. Dhow has created convenience, before, coming to the Central Bank had been intimidating for someone who doesn’t know where to start,” CBK Governor Kamau Thugge said in an interview with this publication last week.
The platform has allowed investors to open and transact on the CSD accounts from the convenience of smartphones and the internet.
DhowCSD has eliminated the previously lengthy process of physically visiting the CBK to open securities trading accounts and has allowed retail investors to conveniently buy and sell government securities from the comfort of their homes and offices.
The CBK now targets to reach more Kenyans in the diaspora through the DhowCDS as it angles to grow remittances through investments by Kenyans abroad in government securities.
CBK has, for instance, held investor tours in the US and the United Kingdom and plans on expanding its reach to the Kenyan diaspora.
“The convenience experienced by Kenyans (at home) can be experienced by Kenyans in San Francisco, China, Japan, and elsewhere. The system can help us with remittances from the Kenyan diaspora. When the President went to the US the other day, we had a team from the bank who presented to Kenyans in the US what this DhowCSD is about. It was the most popular desk where we were stationed. The team did the East Coast of the US and we have another team leaving shortly for the West Coast,” Dr. Thugge added.
In months following the launch of the platform, the participation of retail investors in domestic debt auctions has soared with secondary data from the CBK showing the retailers held 12.92 percent of government domestic debt as of June 19, or Sh671 billion.
The next phase of Dhow CSD will see the integration platform with a new look M-AKiba- a retail infrastructure bond by the government that seeks to enhance financial inclusion for economic development.
M-Akiba was transferred to the CBK from the National Treasury at the NSE following tethering issues that affected its first run including weak understanding of the product and poor timing.
Currently, CBK is setting up structures to integrate M-Akiba into DhowCSD as it seeks to attract wider retail participation in government securities where the minimum investment will be set at Sh600.
CBK says the revamp will primarily focus on easing investor entry and exits to create convenience for the retail participants.
“M-Akiba had its challenges and one was on exit. If you wanted to exit, there was a challenge in liquidity and we did not get enough market makers to be able to do that. Now, a person will be able to come in and exit anytime they want without taking a haircut,” Dr Thugge said.
The new look M-Akiba platform is expected to launch in the second half of 2024.
The innovation saw the CBK named the winner of Central Banking’s Payments and Market Infrastructure Initiative Award in March this year, with the accolade recognising Dhow’s expansion of access to government debt for all Kenyans.
