Laikipia County government is set to float a bond in the stock market to finance its infrastructure projects for 2021/2022 financial year.
Governor Nderitu Muriithi said that his administration was seeking to raise Sh1.4 billion from the county bond that would be used to fund the development of roads and dams in the area.
Speaking on Monday at County hall during the release of county’s half-year Financial Statements for 2020/21 by Finance Executive Murungi Ndai, Governor Muriithi added that the bond was expected to plug the shortfall in revenue allocation by the National Treasury.
“We are now well underway with the processes of issuing a bond for infrastructure development as provided in the framework adopted and approved by Intergovernmental Budget and Economic Council (IBEC),” the governor said.
The governor observed that counties were struggling to allocate funds for development amid huge expenditures on wages and low revenue collection.
Ndai told the gathering that the County had attained a growth of 11 percent in revenue collection for the half-year and expressed confidence that by the end of the financial year, a much bigger growth would be recorded despite the Covid-19 pandemic.
The bond is expected to fund the grading of roads in urban areas, installing street lighting, constructing dams, and beautification towns under the Smart Town Initiative if it gets requisite regulatory approval from the National Treasury, CRA, and Capital Markets Authority.
In July 2019, the Commission on Revenue Allocation (CRA) begun evaluating the credit risk of counties with a view of clearing them to float bonds to fund infrastructure projects.
CRA chairperson Jane Kiringai said the agency had chosen nine counties for evaluation for creditworthiness based on their financial reports and ongoing projects that would help determine their ability to service the bonds.
Nyandarua, Makueni, Mombasa, Meru, Bungoma, Nandi, Laikipia, Samburu, Kisumu, and Lamu counties were the counties picked for the evaluation based on their unqualified audit opinion from the Auditor General.
The Commission in partnership with the World Bank and Capital Markets Authority has already trained senior staff from the financial departments in the counties on capital market products and on how to prepare the devolved units for borrowing.
by Martin Munyi