Lewis Njoka @LewisNjoka

Three counties could soon start raising money from the capital markets after they received their credit ratings under the County Creditworthiness Initiative. 

Unveiled in a Nairobi hotel yesterday, the ratings pave way for the county governments of Makueni, Kisumu and Bungoma to raise money by floating county or corporate bonds at the bourse. 

This follows a recent report by the Commission on Revenue Allocation which shows that most counties were performing below their potential in collecting own source revenue.

In determining the creditworthiness of the three counties, the rating agency considered political, economic, budgetary and institutional variables, among other factors.

The three were part of nine counties pre-qualified to serve as the pilot cohort for the initiative which aims to assist county governments access financing through capital markets for public infrastructure development and service delivery.

The other six counties will be rated once funds are available with the hope to rope in all the 47 counties in the near future. 

Ability to pay

“With the rating, they are in pole position compared to other counties. They will be very attractive to investors because the rating shows their ability to pay if they borrow,” said Luke Ombara, CMA director regulatory policy and strategy.

“But there are instances where they will need a guarantee from the government. When they come to the market we will also subject them to our own criteria which are fairly stringent.

In instances where a county does not meet the criteria but is rated and has a guarantee, CMA has the discretion to give the county a go-ahead,” he added.

The rating, conducted by Johannesburg-based Global Credit Rating agency, will serve as a formal independent opinion about the governments’ creditworthiness score expressed in a standard format.