Category Archives: Laikipia

Laikipia Infrastructure Bond

Laikipia County includes Nanyuki town which is famous for its views of Mount Kenya and vast farms, several ranches and wildlife conservancies in the semi-arid north of the country.

Under its second governor, Ndiritu Mureithi, the County Government of Laikipia also went the furthest in advancing the country’s first municipal bond. Under the new constitution (adopted in 2010), counties can do this to finance projects, if the national government guarantees the borrowing, with the approval of the county assembly (local parliament)

The Laikipia county govt pursued this route in recognition that it had limited resources to undertake large projects and in the hope that the funds raised from the bond will help to catalyze its economy from the current Kshs 100 billion to Kshs 400 billion per year.

When the county assembly had earlier rejected the bond proposal, more public participation and marketing was done on the infrastructure bond. This was done in places like Nyahururu and Rumuruti with residents asked to identify their priority needs and the feedback ranged from issuance of title deeds, completion of feeder roads, youth centres, public sanitation and upgrade of health facilities.

In May 2022, the Cabinet granted final approval to Laikipia’s application for a Kshs 1.16 billion domestic infrastructure bond at a “market deemed coupon” and which the Senate was told would be a 7-year note at 12% with a bullet payment on maturity. The bond is to go towards capital projects and be paid from normal revenue.

For investors, infrastructure bonds are tax exempt. The minimum investment required is Kshs 50,000 and investors should have a CDS account.

The funds to be raised are designated as Kshs 1.1 billion for smart infrastructure upgrades in ten towns to have street lights, paved walkways and sewerage lines etc. at places like Doldol. Others are the Bemwaki road, Muwarak lighting, and Nanyuki bus park) as well as dam projects at Wangwaci and Ilpolei for Kshs 165 million that are to enhance agricultural production.

A county can borrow 20% of its audited revenue and counties were given the green light to borrow up to Kshs 60 billion and Laikipia was the fourth county to earn a credit rating after Bungoma, Kisumu, and Makueni – all counties that were led by “progressive” governors. Makueni was hailed for its health care system and agro-processing ventures, Kisumu under Professor Anyang’ Nyong’o, father of actress Lupita Nyongo has a long history even before he became governor, while Bungoma was led by one of the country’s leading actuaries – who also lost his election last week for being on the ‘wrong party.’

It is not clear what will happen to the bond with the exit of its champion governor. In a Standard article (paywalled) after the election loss, Ndiritu was praised was raising Laikipia’s on-source revenue, steering county residents to enrol in the National Hospital Insurance Fund (achieving a national NHIF high of 64%) and developing programs for leasing road-building and medical equipment.

Laikipia was assigned BB+(KE); “outlook stable” in February 2021 by Global Credit Rating (GCR). Later, after a review period, was upgraded to BBB-(KE) in April 2022, followed in June 2022 to ‘evolving’ from ‘stabledue to enhanced revenue collection of Kshs 840 million in the 2021 financial year.

Whether Laikipia’s bond rating and progress will change, with the defeat of the governor, remains to be seen. One financial expert thinks that the new county government will not see the infrastructure bond as feasible to advance any further.

EDIT November 10, 2022. According to an article in the East African Standard, Joshua Irungu who took over as governor of Laikipia in August 2022 has appointed a task force to look at the viability of the bond as “the county government’s projections of revenue growth, prevailing economic realities, the market base lending rates revision as well as the cost of monies involved are making further pursuit of the bond unattractive at the moment. “

Coca-Cola partners for business recovery in Kenya

Coca-Cola has launched a program to assist traders to quickly recover, and safely reopen their businesses, following months of disruption from Covid-19.

The company will avail Kshs 125 million as part of a Coca-Cola system small business recovery campaign to assist 18,000 businesses, along with its partners including Absa Bank Kenya, Amref Health Africa and the Women Enterprise Fund. This will be through initiatives such as loans, personal protective equipment, sanitation facilities, soda cases, gardening furniture (for outdoor dining) and training to help them reopen safely between October 2020 and March 2021.

Coca-Cola has 300,000 traders in the country, and through its data, has noted the disruptions on these small businesses, 40% of which are at risk of closure even after the government relaxed lockdown restrictions in September 2020. This is partly from expired stocks and slow sales pick up in places like downtown Nairobi.

Absa will provide unsecured business loans of up to Kshs 10 million, for working capital, and up to Kshs 50 million for Local Purchase order (LPO) and inventory discounting. As the financing business partner in this campaign, the bank, through trade data, is quickly able to score the business creditworthiness, and extend financing, to suppliers and retailers in the Coca-Cola ecosystem, without having to scour their financial statements.

Coca-Cola has also extended a grant of $175,000 (~Kshs 20 million) to Amref to support 4,000 micro-outlets, such as eateries and leisure places, in Laikipia, Nairobi and Mombasa counties, to carry out occupational safety changes & training and reopen safely in their communities. Also, for participating businesses in Laikipia, the County Government has offered further support to traders there through credits to offset some business loans as part of a Kshs 123 million Laikipia economic stimulus package.