Zimbabwe has launched its first retail bonds to be offered exclusively through a mobile trading platform in a development that will enhance public participation in capital markets, raise money cheaply while also promoting a broader vision towards a savings culture.
The US$5 million retail bond initiative is based on a joint venture by micro lender, Untu Capital and mobile network provider, Econet and will for the first time allow the public to participate on the secondary markets though their mobile phones where they will trade in shares in real time.
The minimum investment size is pegged at US$50 and is open to individuals, small to medium scale entrepreneurs as well as corporates from anywhere.
The underlying motivation is to promote public savings and broaden the financial inclusion net across all sectors of the economy.
The interest rate on the investments is pegged at 9 percent per annum, which will be paid after every 6 months.
Compared to other money market instruments, this is a competitive rate given that banks are offering interest rates 2 percent below this figure.
This innovation will be critical to attract money that has avoided the formal banking channels because of the weaning confidence by the public in the financial systems.
It also carries convenience in transacting.
That this initiative has a minimal investment size of US$50 is likely to have a greater appeal to the public given that for a similar figure deposited in the bank, there will less likelihood of it attracting an interest in a year.
The retail bonds are secured with a 50 percent guarantee from the African Guarantee Fund, with Untu Capital securing the other 50 percent.
The project has also been placed under the trust of ZB Financial holdings.