Kampala to issue first municipal bond

KAMPALA plans to issue the country's first municipal bond by June 2015 to finance infrastructure development needed to change it into a modern commercial hub.

Ahead of oil production in 2017, Uganda has seen a rush of foreign investment into its power and transport and hospitality sectors, fueling demand for new infrastructure like roads.

Kampala city officials estimate it will need about $6 billion to invest in its infrastructure over the next ten years.

Patrick Musoke, the city's director for strategy, said the World Bank was providing advice on preparations for the debut bond offer and was helping to secure a credit rating.

"We are looking at issuing both project specific and general purpose bonds," Musoke said, adding the first bond will be tied to a specific project, likely a multi-storey car park.

He said the first was likely to be a five-year bond but the size would be determined after the quality of the city's corporate governance and its revenue collection potential had been assessed.

"We are starting to look at alternative sources of financing our budget and we think bonds should be one of these alternatives," he said.

Musoke said the bond would be listed for trading on the Uganda Securities Exchange once issued. The city has the legal authority to contract debt but it was not immediately clear if other local authorities have similar rights.

City officials have also said they intend to expand road networks and drainage systems, improve waste collection and revamp schools and hospitals.