Since July 2023, when the CBK launched its digital trading platform for government debt securities—DhowCSD—it has more than doubled in terms of investor sign-ups to surpass 80,000 new accounts. This certainly manifests one clear indicator of success with regard to attracting retail investors onto the platform for easier and more convenient investment in securities.
DhowCSD is one version of the Central Securities Depository infrastructure that went live on 31 July 2023. The upgrade will make investing in government securities much easier and user-friendly. CBK Governor Kamau Thugge says the number of accounts rose to between 80,000 and 90,000 in less than a year from the 40,000 existing at the time of the launch, indeed rising by 100 percent. Thugge indicated the role of the platform in simplifying the earlier intimidating process of physically visiting CBK offices to open accounts.
It provides a digital platform through which one can open and run CSD accounts via their smartphones and the internet, eliminating the necessity of visiting the CBK offices physically. That has made it easy for retail investors to sell and buy government securities from the comfort of their homes or offices. The CBK is now looking to extend this ease to Kenyans in the diaspora. It eyes increasing remittances by encouraging these Kenyans to invest in government securities.
CBK has engaged with Kenyans in the diaspora, accompanied by investor tours in the US and the UK in popularizing DhowCSD. Governor Thugge underscored its potential to facilitate remittances from Kenyan diaspora plus indicated that it had received warm reception upon presentations in the US. It has plans to increase such outreach to other regions like West Coast of US, China, and Japan.
After the launch of the platform, participation of retail investors in domestic debt auctions has gone through the roof. CBK data shows that as of June 19, retail investors held 12.92 per cent of the government’s domestic debt, equivalent to Sh671 billion. This move went on to cement the efficiency of the platform in democratizing access to Government securities.
The next phase for DhowCSD will be the integration with a revamped M-Akiba, which is a retail infrastructure bond-like product aimed at enhancing financial inclusion as a driver of economic development. After problems faced in the first edition, including liquidity challenges and low market understanding, M-Akiba is now set to be moved from the National Treasury to the CBK. The new platform is due to start running in the second half of 2024, solving these problems with the view of allowing ease of entry and exit into the market by investors with a minimum of Sh600 to invest.
Among the many successes chalked up by DhowCSD, CBK has been awarded the prize of Central Banking’s Payments and Market Infrastructure Initiative Award this March. The award recognizes the platform as having provided broadened access to government debt securities for all Kenyans, which is hereby scored in support of CBK’s commitment toward financial innovation and inclusion.
With CBK set to further improve on DhowCSD while adding the instrumental M-Akiba to its platform, the outlook remains bright for retail investors who eye efficient and accessible ways to invest in government securities.