The World Bank, through its private sector arm, International Financing Corporation (IFC), has pledged to support local governments on the issuance of municipal bonds.

The support will range from financing to capacity building and project prioritisation, according to Ignace Bacyaha, IFC’s resident representative for Rwanda.

We have initiated a programme on how best we will work together and develop your capacities before you can begin to issue municipal bonds, Bacyaha, promised.

He was addressing district officials and vice mayors during a municipal debt financing seminar in Kigali yesterday.

Bacyaha said it is imperative for local governments to embrace debt financing so as to attract long term capital to finance infrastructure projects.

He urged districts to take the opportunity of capital markets in restructuring their debts.

 "Traditional sources of finance are not enough to fast-track government’s economic objectives. There is need to invest more in capital markets as a major source of debt financing. This will help generate more revenue,” Bacyaha, noted.

The seminar was organised by the Agusto and the World Bank Group and attracted vice mayors from  across the country.

In May, this year, IFC issued   a five-year "Umuganda” Bond after receiving World Bank approval to issue a local-currency bond programme.

Kampeta Sayinzoga, the Permanent Secretary in the Ministry of Finance and Secretary to the Treasury, said it will take between two and three years before local governments can issue bonds.

This will give them enough time to clean their books of accounts and have them credited but also weigh on the type of investment projects they need basing on the return, she said.

Sayinzoga said it’s critical for districts to build a strong investment base before they could go ahead with issuance of municipal bonds.

"You have to know what kind of investment you are going to finance, its rate of return and how you will pay back. You will also have to publish your books of accounts, have them rated, install strong financial management systems before you can talk about these bonds, this will help increase your credit worthiness.”

Vivien Shobo, Managing Director, Augusto & co, a Nigerian based credit rating firm, said providing an alternative source of financing will help Rwanda build on the progress the country has achieved over the years.

"With increased urbanisation and demand for public infrastructure, it’s important that government encourages local governments to embrace municipal bonds as an alternative source of finance,” Shobo said.

There is also a need to make good use of pension funds to fund these infrastructure projects, if the country is to harness its economic potential, she added.

Vincent Munyeshyaka, the Permanent Secretary, Ministry of Local Government, urged the leaders to be more accountable, transparent and to prioritise investments.

This is how you will be able to drive sustainable economic development and improve the livelihood of citizens, he said.

Jean-Claude Musabyimana, vice-mayor, Musanze, said there is need for increased awareness before bonds can be issued.

Municipal bonds are debt securities issued by a state, municipality or county to finance its capital expenditures.

They may be used to fund expenditures such as the construction of highways, bridges or schools and other infrastructure projects.