3 counties fit to borrow from foreign markets

Makueni, Kisumu and Bungoma counties have been adjudged fit to borrow from the Nairobi Securities Exchange (NSE) and external markets, opening a new funding window for their projects.

They have been given a clean bill of health by the South Africa-based Global Credit Rating Company (GCR) out of the nine counties that took part in the pilot scheme backed by the Treasury and the World Bank.

The Constitution allows counties to borrow from the capital markets and foreign sources once cleared by the National Treasury.

The GCR gave Makueni and Bungoma counties issuer ratings of BBB (KE) and A3 (KE) for the long and short term respectively, with a stable outlook.

It separately assigned Kisumu issuer ratings of BB (KE) and B (KE) for the long and short term in that order, also with a stable outlook.

“The ratings on the County Government of Bungoma reflect its strong financial profile and ongoing government support, counterbalanced by a very weak entity profile, characterised by limited economic activity,” said GCR.

“The ratings reflect the County Government of Makueni’s stable financial profile underpinned by the consistent transfers from National Government, as well as other ongoing operational and institutional support from National Government,” it said of Makueni.

Kisumu’s ratings reflect “the deterioration in operating performance and weak audit outcomes … counterbalanced by the strong financial profile and government support.”

The ratings were conducted under the County Credit Worthiness Initiative, a programme by the National Treasury, Commission on Revenue Allocation (CRA), the Capital Markets Authority and County Governments, supported by the World Bank.

The ratings seek to provide the first formal independent opinion on the credit worthiness of the devolved units.

Access to borrowing will ease financing pressure on the counties.