The Central Bank of Kenya (CBK) is laying the groundwork for a new digital Retail Bond System designed to revolutionize how Kenyans invest in government securities by enabling seamless access via mobile phones and online platforms.

According to a comprehensive procurement notice released by the bank, CBK is scouting for a vendor to develop and implement the high-capacity platform, which is expected to support at least 40 million concurrent transactions and remain accessible 24/7.

The envisioned system will empower individual investors to open and manage government securities accounts, purchase bonds, remit payments, receive interest payouts, and participate in secondary market trading entirely from their devices.

Access will be enabled through USSD codes, mobile apps, and web portals.

CBK emphasized that the system must integrate with critical financial and government infrastructure, including mobile network operators, commercial banks, the Central Securities Depository (CSD), tax systems, and national identity databases.

It must also support multiple payment channels such as mobile money wallets, Real-Time Gross Settlement (RTGS), SWIFT, and Kenya’s fast payment systems.

“The Retail Bond System will provide a secure and user-friendly platform for retail investors to directly access government securities,” the document stated, adding that the system must also support features such as portfolio management tools, automated reconciliation, and real-time alerts via SMS and email.

In addition to primary bond issuance through auctions, the platform will enable functions like tap sales, bond reopening, rediscounting, and collateralization for borrowing.

A key requirement is the ability to accommodate a retail bond issuance programme tailored to local market conditions, complete with pricing and valuation tools.

For transparency and compliance, CBK is demanding a robust audit trail, advanced role-based access controls, and disaster recovery capabilities.

The system must also feature business intelligence dashboards for real-time reporting and data analytics.

In a nod to future innovation, CBK noted the platform should be scalable enough to support technologies like blockchain and artificial intelligence for digital retail bond issuance.

To ensure reliability, vendors will be required to enter into an escrow agreement that guarantees the system’s availability even in the event of vendor failure.

A separate service-level agreement will outline obligations for maintenance and performance standards.

However, the CBK clarified that integration with its existing T24 core banking system will not be part of the new platform’s scope.

This digital retail bond initiative is part of CBK’s wider agenda to enhance financial inclusion and expand public participation in the capital markets by making government bond investments more accessible to ordinary Kenyans.