Financial expert touts municipal bonds

Prof Warsame
Local authorities have the ability to issue bonds of up to 10bn/- and reduce dependence on the central government to finance development projects.

The bonds issuance, according to financial analysts, will also increase local governments' transparency in funding infrastructure development projects and social welfare programmes.

Dhow Financial Chief Executive Officer (CEO) Prof Mohamed Warsame said people's perception that municipal councils cannot contract loans does not hold water.

The finance professor added: "the economy is liquid enough to support the issuance of such bonds - municipals have to come forward to push the process.

“Before bonds are introduced in the market, the CEO said, rating of municipal councils is crucial to give investors a picture of the kind of the authority he was lending.

Prof Warsame said during CRDB Bank seminar for journalists that once a municipal issued a bond, say for road construction, it has to report back to investors on the progress of the projects, hence increase accountability.

The introduction of municipal bonds will enable local governments to secure long-term loans for capital intensive projects, such as roads, hospitals and building schools.

With the bonds, the municipalities will have the capacity to raise relatively cheap funds to undertake various projects which are important for social and economic development
Source: The Daily News,http://www.dailynews.co.tz, reported by Abduel Elinaza
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