In a bid to accelerate the disbursement of funds to Kenya’s counties, the Senate and the Council of Governors have put forth a proposal for the implementation of a devolution bond. This move comes as a response to the persistent challenges faced by county governments in accessing their allocated funds from the national government, with county governments owed Sh61.1 billion in May and June budget allocations. By introducing a devolution bond, the Senate aims to streamline the financial flow and ensure the timely delivery of resources to support local development initiatives across the country.
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Devolution, introduced in Kenya through the 2010 Constitution, aimed to bring government closer to the people and foster socio-economic growth at the county level. However, the effective functioning of devolution hinges on the availability of adequate financial resources. Unfortunately, delays in the release of funds have hindered counties’ ability to meet their obligations and impeded progress in critical sectors such as healthcare, education, infrastructure, and agriculture.
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The Senate proposed the issuance of Kshs 100 billion first, then having it revised upwards depending on the observed bond uptake. This will involve issuing bonds that will be purchased by investors, both locally and internationally, seeking attractive returns. The funds raised through the bond issuance will be channelled directly to the counties, bypassing the delays often experienced in the government’s budgetary process. This innovative solution aims to bridge the gap between resource availability and implementation at the county level.
Implementing a devolution bond holds several advantages. First, it ensures that county governments have access to the necessary financial resources on time, empowering them to execute their development plans effectively. This timely injection of funds will enable counties to address pressing issues, foster economic growth, and improve service delivery to citizens.
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Second, the introduction of a devolution bond opens up investment opportunities for individuals and institutions interested in supporting Kenya’s development agenda. It attracts both local and international investors, fostering economic partnerships and stimulating growth in the financial market.
The Senate’s proposal for a devolution bond presents a promising solution to expedite the disbursement of county funds in Kenya. By harnessing the power of capital markets, counties have the potential to transform their economies and uplift the lives of their citizens. The success of this initiative will depend on the effective utilization of funds, robust governance mechanisms, and transparent accountability. As counties continue to explore innovative financing options, it is crucial for stakeholders to work collaboratively to achieve shared prosperity and a brighter future for all Kenyans.
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