HARARE mayor Bernard Manyenyeni has said the city’s $100 million municipal bond scheme received ministerial approval and will not be affected by the recent ban on local authorities from using borrowing powers to raise funds.
by PAIDAMOYO MUZULU
Local Government ministry permanent secretary, George Mlilo recently announced that the government had stopped local authorities from using borrowing powers to raise funds.
But Manyenyeni said Harare’s borrowing powers were given the nod before the announcement and, therefore, would not be affected. “It was approved already, but there appears to be a rethink on the matter. However, we are of the opinion the approval won’t be rescinded,” he said.
The $100 million is earmarked for road maintenance, refurbishing of the water and sewer reticulation system, renovation of council houses in Mbare, building of two new polyclinics and informal sector factory sheds.
Manyenyeni said the city will go ahead with finding a lead sponsor or promoter of the municipal bonds.
“The process of identifying the lead sponsor is already in motion and we hope to conclude it soon,” he said.
Harare has been working with the Old Mutual-controlled Cabs, to finalise the specifics of the bonds, as its lead financiers.
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They are finalising the proposed tenure of the bonds, coupon rate and financial status of the bonds.
““Indicative coupon rate is 6% per annum and tenure will depend on the projects to be financed, but we were looking at between five and 10 years. We wanted long term but this will depend on the sweeteners like if the bonds will be given prescribed asset status or liquid asset status and securities such as government guarantees,” the Harare mayor said.
Prescribed asset status means insurance and pension houses will be obligated to invest and liquid asset status means the bonds can be freely traded on the markets, thus, making them attractive to investors who do not want to hold them to maturity.
This is the first time the city, after independence, is going to the bond market to raise revenue for infrastructure development after more than a decade of economic deterioration that brought pressure on infrastructure.
