According to officials, Kigali City is issuing the first ever municipal bond in East Africa. Officials say the bond will be listed on the Rwanda-over-the-Counter Market by late March or early April

Kigali City Council (KCC) will borrow Rwf40 billion from the public by issuing municipal bonds for the next three years. Municipal bonds are debt obligations issued by states, cities and other governmental entities to raise money to build schools, highways, hospitals and sewer systems, as well as many other projects for the public good.

If one purchases a municipal bond, he or she is lending money to an issuer who promises to pay a specified amount of interest (usually paid semi-annually) and return the principal to the purchaser on a specific maturity date.

According to officials Kigali City is issuing the first ever municipal bond in East Africa. Bruno Rangira, KCC’s Director of Communications said the bond should be listed on the Rwanda-over-the- counter market by late March or early April.  
Rangira said that the city’s administration has not yet decided the coupon rate for the 8 year bonds. But he believes it is likely to be between 10 percent and 11 percent.

"We are waiting for the final draft of the business plan,” he said. 

The move could attract a large number of investors who  will be paying attention to the high interest income associated with it. It will also offer more investment alternatives on the Rwanda-over-the-Counter market (ROTCM).

At present, amongst all bonds listed on the Rwanda OTC market, the Commercial Bank of Rwanda (BCR) corporate bond offers highest interest rates. It has a coupon rate of nine percent.

Issuing the municipal bonds will help Kigali City to raise funds required to finance its various commitment in the embedded 50 year renewable Kigali Master Plan which was launched recently.

The city is supposed to avail water, electricity, roads and sewage systems in the proposed areas and then sell the projects to investors for further development.

KCC has already contracted Dyer & Blair Securities, as the sponsoring broker to carry out the proposal of the bond and authorities said by listing they expect no shocks resulting from the offer despite Rwanda’s high inflation rate .

Kigali’s new central business district is part of the projects area that have been lined up for development. According to the Kigali City, the city has now engaged qualified consultants to implement this phase of the master plan.

OZ International from USA and SCE-SURBANA from Singapore have been contracted to effectively develop detailed physical plans for immediate zones.

The zones includes the Kimihurura Gateway for the development of commercial, tourism and recreation facilities in Kimihurura, a commercial district at Muhima and Kimicanga and Akumunigo Development Zone for a self sufficient residential hub in Nyamirambo-Nyarugenge.

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