Ten county governments could start borrowing money from capital markets to finance infrastructure in September.
The ten counties are taking part in a pilot aimed at preparing them to get into the open markets to access funds and enable them to undertake development projects with the comfort of paying over time, just as the National Government does.
This, however, exposes the taxpayers to more debts especially as the National Government is expected to guarantee the county governments debts.
Global Credit Rating Agency, through Metropol, will start a three-month process to rate the counties, after which the counties that pass the good credit score test can go ahead and borrow funds.
The Commission on Revenue Allocation (CRA) together with the World Bank have started the process to determine the creditworthiness of the ten counties. The Capital Markets Authority is also developing products that can enable county governments to borrow from the local market.
“From Monday, the rating agency will be on the ground working with the counties. By September they will come with the first set of shadow credit rating, then your ability to go to the market will depend on what the rating says,” said CRA Chairperson Jane Kiringai during the launch of the County Creditworthiness Initiative
Counties will get a rating of between AAA to D. Counties with a rating of B and above will be considered to start borrowing.