Kenya to allow county governments borrowing for development

Kenya will soon allow county governments to borrow development funds from the capital market, announced the Capital Markets Authority (CMA) on Thursday. "We are in the process of structuring viable country bonds that would target improving infrastructure across all 47 counties," said CMA chairman Kungu'u Gatabaki, adding that the move will increase investment products at the Nairobi Securities Exchange (NSE). He was speaking in the capital Nairobi during the opening of a two-day workshop on ethics and governance in Kenya. "It is obvious that the current allowable levies on agriculture, road use, water use, entertainment and so on, may not be sufficient to augment what is being disbursed from the national government," said Gatabaki. He said this is where the capital markets come in as there will be unique opportunities to raise funds through Initial Public Offerings (IPOs), project financing, asset backed securities, and other innovative products such as Public Private Partnerships (PPPs). For this to happen, however, counties will have to introduce laws allowing them to fund projects through the capital market, according to the CMA.