Infrastructure Bond

The launch of the (Kenyan) infrastructure bond is indeed a laudable move by the government in its efforts to augment its previous methods of financing infrastructure.

On the launch, the CBK reiterated the importance of infrastructure development as a priority area for economic development and its crucial role in Illusion 3020 Vision 2030. Visions aside, the 12yr bond intends to raise Ksh 18.5bn ($ 232mn), is to have a coupon of 12.5% and will be listed on the NSE. A 3 phase redemption structure will apply. The bulk of the funds raised (43%) are to be channeled to energy projects, 35% to roads and 22% to water, sewage and irrigation.

Hopefully in future there will be more sector specific bonds. I’d like to see a 10bn bond channeled towards roads 3 months down the line. Otherwise, 2030 will be here before the bypasses promised by the right Hon. are up and running. I’d love to see an 8bn bond municipal bond every other month – otherwise the ‘kajo’ might just have to impose a sales tax to raise funds if real development is to be fast tracked; that’s a story for another day though.

What I’d really love to see with this bond is a website that lets interested parties know the status of the funds and how far along the projects are on a quarterly basis. That might be a bit much to ask but otherwise how are we to know that the funds are not funding some political party’s propaganda?

All in all, it’s a start.