The Commission on Revenue Allocation (CRA) has a constitutional mandate to advise county governments on how to finance their operations and investments in ways that meet the fiscal responsibility yardstick. This mandate implicitly confers an obligation to help County Governments bridge the financing gaps that may exist. In line with its mandate, the Commission in collaboration with the World Bank Group (WBG), conceived the County Creditworthiness Initiative (CCI) for Kenya to provide technical assistance to county governments in bridging the creditworthiness gap and access market finance for infrastructure and other development projects.
The CCI was conceived to coordinate and integrate existing efforts, instruments, knowledge, and resources from partners and stakeholders by identifying the most effective financing solutions and implementation arrangements for County Governments in Kenya.
CCI is a multiagency platform for shepherding county governments towards creditworthiness. Other collaborating agencies include the World Bank Group (WBG), Capital Markets Authority (CMA) the National Treasury (NT), Intergovernmental Budget & Economic Council (IBEC), Office of the Auditor-General and County Governments (CG).
Objectives of the Initiative
The initiative seeks to obtain a deeper understanding of elements that impede County Governments borrowing and propose solutions and implementation. Specifically, it aims to achieve the following outcomes: –
- a strengthened regulatory framework for County Government borrowing.
- a reformed fiscal decentralization typology that supports responsible borrowing regulated by market discipline.
- CRA that can oversee a sustainable County Governments borrowing.
- a capital market that is ready for County Government borrowing.
- strengthened financial management by County Governments as may be necessary for market access.
Current status of CCI
- The World Bank Group (WBG) and CRA took Nyandarua and Mombasa county governments through the county creditworthiness self-assessment tool in March 2021.
- Shadow credit rating of Nyandarua and Mombasa county governments is underway. The ratings will be ready by 30th June 2021.
- Renewal of the credit ratings for Bungoma, Makueni and Kisumu county governments is underway. The new credit ratings will be out by 30th June 2021
- GCR, CRA and WBG have held management meetings on credit ratings with the five-county governments (Makueni, Mombasa, Kisumu, Nyandarua and Bungoma).
Upcoming CCI Activities
The following activities are to be undertaken: –
- Carry out county visits to share the credit rating reports (shadow credit ratings) with the five-county governments (Makueni, Mombasa, Kisumu, Nyandarua and Bungoma). This activity is scheduled to take place towards the end of June 2021.
- Going public with credit rating(s) will be directed by the respective leadership of the five-county governments.
- Technical assistance to improve the credit rating(s) of the five-county governments.
- Development of a market-based product(s) for county governments.
- Laikipia county government is in the process of issuing a bond guaranteed by the National Treasury after making their credit rating public on 23rd February 2021.
- CRA to roll out the CCI to the remaining county governments.