Municipal bonds will help boost self-reliance

The move by the Capital Markets Authority to support districts through the issuance of municipal bonds (on behalf of the districts) is a great relief to the local governments that were starved of badly needed development funds.

The move by the Capital Markets Authority to support districts through the issuance of municipal bonds (on behalf of the districts) is a great relief to the local governments that were starved of badly needed development funds.

According the CMA, guidelines to enable the issuance of municipal bonds could be ready next month. This initiative will not only make districts financially strong but it will also help them deliver better and improved services to the citizenry. The government which has been footing a huge chunk of the districts’ budget will also now have a breather since local governments will have got another source of funding.

In developed countries, local authorities generate their own revenue from different sources, including investment projects like real estate, on top of funding from the central government. This is the road Rwandan local governments should take if they are to ensure quality and timely service delivery to the people.

What is important is to have clear development plans and ensure that every penny is accounted for when the time comes. Also, district councils have the challenge of identifying inclusive projects, especially those that have a multiplier effect like job-creation. It is also important that districts secure the important key element, investment grade rating to attract more and better investors. This would help generate more revenue if top investors participated.

As the Capital Markets Authority and district councils prepare to start issuing municipal bonds, they should not forget to sensitise local leaders and the public, especially the would-be investors, on their benefits. This helps to garner support for bonds issuance and the district projects that would be identified thereafter.

However, the CMA should not stop at the issuance of the bonds. It should look for many more products that will diversify the securities market like the introduction of an alternative market for small-and-medium firms.

It is initiatives like this that will push the country to greater heights. 

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