Kigali City Council (KCC) has attributed the delay of issuing its municipal bond to the current liquidity constrains in the local banking sector coupled with the global financial crisis.

KCC had planned to issue a municipal bond in September last year.
"We kept setting dates because our financial advisors told us to hold on a bit until the global financial crisis settles,” Bruno Rangira, Director of Communication at KCC said in an interview on Thursday.
KCC appointed Dyer & Balir as their investment advisors last year.

The city council is also searching for a Special Purpose Vehicles (SPV) that will manage the funds.

City council officials also said that the current financial situation has forced them to revise, downwards, the size of investment capital to be generated from the public.  

KCC had initially intended to raise Rwf40 billion for a period of three years from the public to finance the implementation of the 50 year Kigali Master Plan that was launched early this year.

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

Kigali’s new central business district is part of the project areas that have been lined up for development.

Other project areas to be developed include Kimihurura Gateway which has been earmarked for the development of commercial, tourism and recreation facilities.

They also include development of a commercial district at Muhima, Kimicanga and Akumunigo and a self sufficient residential hub in Nyamirambo.

Rangira said that the delay which has also affected their investment plan has been due to the fact that investors (bond subscribers) needed assurance of the city council’s ability to repay the loans. 

"The bond will be backed by land itself. There is no guarantee from the central government. The Kimihurura republican guard will be acting as guarantee,” Rangira revealed.

The bond, which is the first of its kind in the East African region, will be open to foreign investors.

"We will invite other investors outside Rwanda to participate. We are considering cross boarder placement,” Rangira said.

City administration and Dyer & Blair have not yet not yet decided the coupon rate.

"We are waiting for the final draft of the business plan,” he said.
The KCC municipal bond will also be listed on the Rwanda Over The Counter (OTC) market which currently has one corporate bond and three government Treasury bond listed.

The Rwanda bourse last month registered its first equity listing from Kenya Commercial Bank’s (KCB).

Francois Kanimba, Governor of the National Bank of Rwanda said that this is not the right time to raise money from the public.

Kanimba said considering the current liquidity situations, government is also not planning to raise long-term capital from the public by issuing treasury bonds. 

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