Inside CBK’s Central Securities Depository launched by Ruto
President William Ruto has launched the Central Securities Depository Dhow at the Central Bank of Kenya (CBK).
In a statement on Monday, September 11, 2023, moments after launching the digital facility, Ruto said that the facility will eliminate barriers for Kenyans to trade in the financial market.
"The development of the Central Securities Depository Dhow cements the Government’s Plan to eliminate barriers to trade. It offers a rare window of opportunity to millions of ordinary Kenyans to participate and meaningfully contribute to the building of our country," Ruto stated.
"The electronic infrastructure will deepen the domestic capital market, promote savings and investments besides fostering the growth and stability of our financial markets."
The launch of the Central Securities Depository will see investors in Treasury bills and bonds barred from making bids and payments for the securities at CBK. Instead, all bids and payments for the securities at CBK will be made online.
"CBK is discontinuing manual submission/drop off of bids at its centres. Investors will no longer be able to submit manual bids to participate in auctions. Bids will be done through the DhowCSD," CBK stated.
Central Securities Depository opens doors
The new facility is set to enable Kenyans, whether in the country or abroad, to invest in government debt without having to visit CBK physically.
The facility dubbed DhowCSD is targeting to net in over Ksh400 billion from Kenyans living abroad, who would wish to buy government debt.
All current investors who have been buying the Treasury bills and bonds manually or through the Treasury Mobile Direct service will now be transferred to the new platform.
Also, CBK will no longer accept cash or cheque deposits for payments of Treasury bills and bonds - all payments will be done via a commercial bank.
The platform will also allow banks to trade with one another by exchanging collateral of their treasury holdings.
The platform, funded by the World Bank, was expected to go live in June 2022, close to two years after its design started in September 2020.
DhowCSD went live on Monday, July 31, 2023, and during the period since the launch, more than 7,000 new accounts have been created, compared to the total of 44,000 that existed prior to the go-live.
According to CBK, the name 'Dhow ' was deliberately adopted to signify the role that the CSD will be playing in the financial and capital markets.
The 'Dhow' refers to the traditional wooden boat, which was used to facilitate the trading of merchandise along the coasts of East Africa, Eastern Arabia and South Asia.
"The name, therefore, fits the new Central Securities Depository in the sense that the CSD serves to facilitate, not just the trading of Kenya Government securities locally and across the border, but also facilitates the integration of Kenya with international financial markets," CBK stated.
