City Hall goes for Green Bond to finance long-term infrastructure projects

 

Nairobi Governor Johnson Sakaja when he appeared before the Senate Devolution Committee at Argyle Grand Hotel, Machakos on May 3, 2024. [Boniface Okendo, Standard] 

Nairobi County has set in motion plans to launch a green bond as part of the revenue mobilisation strategy to finance multimillion-shilling infrastructure projects.

Governor Johnson Sakaja said a green bond is a fixed-income instrument whose earnings are reserved fully for projects with environmental benefits, mostly related to climate change mitigation and adaptation measures.

Sakaja said the enormous resources expected to be collected will go towards financing long-term projects like roads, water and waste management as he seeks to strengthen the city’s fiscal position in line with its ambitious Vision 2050.

“The green bond targets projects around natural resources depletion, loss of biodiversity, air, water or soil pollution, Nairobi county is setting pace for diversification of revenue generation to finance long-term projects through a green bond to be floated in next financial year,” said Sakaja.

The Governor said it was the responsibility of his administration to offer city residents solutions to clear the mess that has been witnessed over the years with the floating of a green bond used to create order and also open up various opportunities for them.

According to Sakaja, once the bond is floated it would be the first of its kind by any county in Kenya and will see Nairobi tap into the financial market to raise more funds to finance its mega projects in a more resilient and self-reliant manner easing the burden on city residents.

He said it would be crucial to explore the possibility of the green bond with policy changes on how the city residents move around, how they build houses, how they manage waste and that everything needs to be done to relieve city residents of the burdens they face.

“The resources from the green bond will be used to build a mass transit system, expand the infrastructure for waste management and water distribution across the city and we will partner with the Ministry of Trade for other financing options through the Nairobi Stock Exchange,” said Sakaja.

He said Nairobi Water and Sewerage Company alone will need a capital investment of about Sh30 billion to offer services and develop a proper water and waste management system that will serve the people of Nairobi.

Laikipia County was the first devolved unit to get Treasury and Parliament approval to float a Sh1.16 billion infrastructure bond in the 2022-23 financial year with this being a unique bond which unlike a green bond, targets to fund specific infrastructure projects.

Nairobi County administration has raised the highest revenue ever by a county government through its own sources, reducing its reliance on exchequer releases raising over Sh12 billion, a record amount that has never been mobilised since the advent of devolution.

Nairobi Water and Sewerage Company also recorded a remarkable performance in revenue collection which has gone past Sh10.3 billion so far, with a few days to the closing of the financial year ending June, 30,2024

The record revenue mobilisation has been realised through the county administration digitisation of its dozens of revenue streams and efficiency of systems recently unveiled with the good attributed to cashless policy that has enabled it to strengthen revenue systems

Under the Unified Business Permit, customers can pay for services with ease, sealing loopholes occasioning massive revenue leakages, the system combines business, fire, food, health, and advertising licenses into one available on NairobiPay revenue service online portal.

A report by the Controller of Budget shows that during the 2022-23 financial year, Nairobi County collected Sh8.16 billion out of the Sh36.8 billion own source revenue generated by all the 47 counties with the county raising Sh7.6 billion in the 2021-22 financial year

The report as of March 2024 shows that Nairobi County accounted for 68.5 per cent of the stock of pending bills at Sh107 billion with most of the pending bills having been accumulated over the years.

Sakaja said city hall owes various law firms Sh21 billion in pending bills saying some of them are questionable saying this was higher than the equitable revenue share the county receives annually.