Nairobi county presses on with green bond issue plans despite delays

Nairobi Deputy Governor James NjorogeMuchiri addressing an experts group meeting held in Naivasha. [Courtesy]

Nairobi County is pressing ahead with plans to issue green bonds to raise an initial Sh500 billion to fund sustainable infrastructure projects.Any funds raised under the plan will be allocated to projects that promote sustainable urban development, such as green transportation.  

After facing initial challenges, City Hall now says it has shifted its focus to strengthening its financial data and management systems to ensure transparency and attract potential investors.  

This foundational work, though time-consuming, the county administration reckons, is essential for the successful issuance of green bonds.  

To support its green bond ambitions, the county government is collaborating with the United Nations Economic Commission for Africa (UNECA) to enhance the city’s financial management capabilities and strengthen its fiscal sustainability, said the Deputy Governor.  

The collaboration is part of the UN Development Account (DA) project, which aims to strengthen the capacity of cities in Africa to improve their financial management and expand fiscal space. “We are progressing on it. We realised we needed to do certain data housekeeping, which we have been doing. And once we have done that, then we have a proper set of records that we can use to deal with partners,” said Deputy Governor Njoroge Muchiri yesterday.  

Once the data consolidation is complete, Mr Muchiri says City Hall will then engage with capital market authorities and investors to finalise the green bond issuance. The deputy county boss did not give timelines for this.   

Nairobi, a bustling metropolis with a daytime population of seven million, faces significant challenges due to rapid urbanisation.  

Rickety wastewater systems struggle to keep pace with population growth, while traffic jams and water rationing are a daily reality for residents. Long-standing plans for a mass rapid transit system, similar to those in Dar es Salaam, Addis Ababa, or Bogota, remain unfulfilled, leaving millions of Nairobians to grapple with traffic logjams during peak hours.  

Governor Johnson Sakaja has previously said the Nairobi Water and Sewerage Company alone will need a capital investment of about Sh30 billion to be able to offer services and develop a proper water and waste management system that will serve residents. The green bond will also be used to sort out the garbage issue in the capital by converting waste into energy, he had added.  

According to the Chief of Urbanisation and Development at UNECA Atkeyelsh Persson, there is a need for expanded and diversified municipal finance as urban populations continue to rise. Ms Persson says that the fiscal autonomy of local governments is key in local financing, “particularly in a post-Covid-19 and global recession environment, with shifts to the financial landscape.”  

“It is important to link research and practice for disseminating lessons to counties and other institutions,” she added in a statement.   

She highlighted in a statement the challenges faced by local governments in providing services due to limited fiscal space, the impact of the Covid-19 pandemic and the high informality in the economy.  

Under the UNECA programme, Nairobi County is currently undergoing a comprehensive financial assessment, focusing on key areas like liquidity, autonomy, operating surplus, collective efficiency, and solvency.   

This assessment officials say will provide valuable insights into the city’s financial health and identify areas for improvement.  

The project is expected to yield several benefits for Nairobi, including enhanced financial management by improved financial planning, budgeting, and reporting.  

It also plans to increase revenue generation by exploring new revenue sources and optimising existing ones, improving service delivery by allocating resources more effectively to deliver essential services and strengthening fiscal sustainability by building resilience to economic shocks and long-term financial stability.  

According to the Nairobi County Secretary and Head of Public Service Geoffrey Akumari, City Hall is keen on enhancing tax collection and ensuring that more Nairobians are brought into the tax bracket instead of raising taxes.  

“We are currently doing Sh12.8 billion per year but we are eyeing to reach Sh20 billion by the end of this financial year,” he said.  

Nairobi gets the lion’s share of the shareable revenue at Sh20 billion. However, most of it is spent on the wage bill leaving little for development projects like roads, among other key infrastructure.

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