When Nairobi County Governor Sakaja Johnson was sworn in, he immediately faced the enormous challenge of funding the heavily indebted county government.
Sakaja noted he would source for long-term financing to meet the development needs of the County through the issuance and listing of a green bond and the potential listing of County agencies such as Nairobi Water and Sewerage Company.
On Tuesday, the Capital Markets Authority (CMA) announced plans to support the county in the issuance and listing of a green bond as the county seeks to tap fundraising opportunities through the capital markets.
“We need about Kshs 17 billion to address the sewerage situation and expand the water pipes to meet Nairobi’s growing population,” said Sakaja.
Adding that: “The County cannot raise these funds from conventional sources such as banks or even from its own revenue thus, the capital markets offer an affordable and long-term solution. ”
County financing through the capital markets has been one of the Authority’s key priorities as outlined in the 10-year Capital Market Master Plan which envisions that 30 percent of financing for counties will be drawn from the capital markets.
“The will support the Nairobi City County Government to raise funds through the capital markets.
However, it will be important for the County to demonstrate good governance through the prudent application of funds raised, to give confidence to investors for future county capital raising exercises”, CMA Chief Executive Officer Wyckliffe Shamiah noted.
The Governor observed that his present focus was to lay the groundwork for the fundraising by addressing the financial status of NCCG, its pending bills and credit rating, to attract investment capital.
Noting Nairobi’s favourable geographical position to Africa, Europe and North America, the Governor further underscored his commitment to address transit challenges in the city which is likely to result in decongestion, improved urban planning and cost as well as time savings, considering that the average daily commute within Nairobi was four hours, whereas a flight to any hub in Europe was eight hours.
The two parties agreed to form a committee that will action the opportunities in the capital markets.
CMA will lead engagement with all stakeholders, including where possible, a push for changes to policies and laws to enable counties to borrow above the current limit of 20 pc of their audited annual revenues,for development projects.
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