At Sh1.16 billion, Laikipia County's proposed infrastructure bond was hailed as a game changer; in addition to funding the upgrading of 10 rural townships, the bond would set a benchmark.
Laikipia was to be the first to raise funds from the domestic market, a move other county governments were expected to emulate.
Had it come to fruition, the initiative, which was the brainchild of former Governor Ndiritu Muriithi, would have seen rural markets upgraded at a cost of Sh1.2 billion with the county government bridging the deficit in what was dubbed the Smart Town Projects.
The urban centres spread across the three constituencies would have gulped Sh1.16 billion with upgrading works in each of the ten towns costing between Sh59 million and Sh102 million.
Construction of two major dams, the Nanyuki Town main bus park and several roads within the town and in Nyahururu were also factored in the upgrade programme.
However, the bond is now in limbo, and with it the dream to upgrade the towns shattered after Governor Joshua Irungu’s administration gave it a wide berth.
The projects that were initiated three years ago remain a mirage, with Mr Irungu dismissing them as “elitist” and maintaining that he has no plans to proceed with the upgrading.
Some of the targeted beneficiaries are disappointed while contractors who had begun works are owed millions of shillings.
The process was initiated in 2021 and received approval from relevant authorities – the County Assembly, the Intergovernmental Budget and Economic Council (IBEC), the Cabinet and a guarantee from the National Treasury.
A nine-member Senate Committee on Finance and Budget received the loan guarantee report from the Finance Cabinet Secretary on June 12, 2022, considered the report and recommended approval.
But before approval by the Senate, the 12th parliamentary sittings were prorogued ahead of the 2022 General Election.
Had the idea matured, at least 10 market centres would now be at par with Nanyuki and Nyahururu towns where drainage, lighting and roads are well developed and maintained.
In justifying the borrowing of the funds Mr Muriithi said the decision was informed by the five-year County Integrated Development Plan (CIDP, 2017-2022) which was clear on what the people wanted.
“Governor Muriithi was elected on that manifesto that was included in the CIDP. The need by the people was projected to be Sh59 billion for the five years against a projected revenue of Sh30 billion and in the prevailing circumstances, an innovative approach had to be sought and the county infrastructure bond was the ultimate solution,” Mr Murungi Ndai, then County Executive in charge of Finance and Economic Planning, said in an interview.
On whether the huge loan was likely to burden tax payers, Mr Ndai said the approach of any structured public financing is based on a feasibility study that includes economic, social and financials.
“There was no doubt the initiative was to pay back principal plus interest. This is how all governments work–including Kenya that has issued several infrastructure bonds for development purposes,” he said.
While Mr Muriithi’s administration defended the Smart Town Initiative as a commercially viable project aimed at addressing the needs of the people, the current administration terms it a non-priority that would burden not only the targeted beneficiaries but the entire population of about 500,000 with heavy taxes to repay the loan.
Governor Irungu said when contractors moved in to start the works, there was no vote head allocated at the time of signing the contract.
“We have no problem with borrowing loans for development regardless of the amount. But a responsible government needs to factor in the priority of the people and then consider commercial viability in a particular project since the principal amount has to be repaid plus accruing interest,” Mr Irungu told Nation.Africa in an interview.
He said his administration would propose raising in excess of Sh2 billion through an infrastructure bond but for development of priority projects.
“We have conducted public participation before coming up with the 2022-2027 CIDP and the people have told us that their top priority is water for agricultural production and improvement of health services. Once implemented, these two will have guaranteed income unlike upgrading towns where we cannot be certain that the infrastructural development will attract investors,” the governor said.
Mr Irungu argued that rural towns should develop organically through empowering of local communities by boosting their main income generating activities to guarantee cash flow and investment in their local urban centres with the government coming in to install crucial infrastructural utilities.
The governor noted he had not abandoned the bond, saying he would request the Senate to modify the concept and include health, water provision and agriculture.
“If they allow us, we will take up the money as soon as possible. My only problem is that smart towns alone cannot guarantee payment of the loan plus interest,” he said.
When the Nation team visited some of the rural towns that were targeted for upgrade, residents expressed disappointment, saying they have remained in the dark on the fate of the projects.
“I remember Governor Muriithi visiting here in May 2022 where he promised that a modern open air market would be built, roads and drainage upgraded, complete with an ablution block. A few days later, a contractor came, dug some trenches then disappeared,” said Ms Purity Wanjiru, a trader at Naibor market in Laikipia North Constituency.
Residents from the other rural towns, including Pesi, Doldol, Kalalu, Karuga, Matanya, Wiyumiririe that were set to benefit from the funds, said construction works were abandoned midway, leaving them with trenches that posed a risk to residents.
Some residents said they did not have prior information of what was happening and they thought the county government had decided to tarmac our roads.
“Trenches that were dug on our shop entrances were so deep that we had to request the new county government to fill them up so that our businesses become accessible after the contractor left,” said Mr Sila Kirimi, a trader from Kalalu Market in Laikipia East constituency.
Some residents argued that there were other pressing needs such as water provision for agriculture and domestic consumption.
“Our town has recorded fast growth in recent years since horticulture is our main economic activity. However, as much as we are not opposed to infrastructure being upgraded, our priority is water for irrigation and we urgently need desilting of Nguo dam, our main source of water,” said Mr Jesse Wambugu, a youth leader from Pesi market in Laikipia West Constituency.
At Ol Jabet market, one of the smart towns piloted in the project and funded by the Kenya Devolution Support Programme (KDSP) to the tune of Sh200 million in 2021, traders and locals said they were yet to reap the benefits envisaged in the project.
Ol Jabet Town is well tarmacked, with parking lots, a proper drainage system and well lit streets. However, there was no sign of vibrant commercial activities apart from a few newly opened hardware shops and a mini-supermarket.
“We are happy that our town is beautiful as opposed to a few years back when we waded through mud whenever it rained. However, access roads to and from the town are impassable during rainy seasons and we face difficulties ferrying farm produce outside the centre,” said Mr Simon King’au.
The County Treasury office said that since the upgrade to a smart status four years ago, the county’s revenue department is yet to reap the gains.
“You can easily identify a town that is economically vibrant by noticing the entry of manufacturing industries and financial institutions, which are lacking in this case,” said Mr Daniel Ngumi, the CEC in charge of Finance and Economic Planning.
Mr Ngumi added that the county is holding discussions on how to compensate contractors, hired by the previous regime, who had undertaken some works. Some of the contractors have already moved to court to seek redress.
“Some of the contractors signed the contract as late as April 2022 yet the infrastructure bond funds were not available. We are considering paying those who did some work. But we cannot commit public funds for work not done,” he said.
