Bosco Hitimana

KIGALI, RWANDA - Kigali city council has put on hold the much-awaited issuance of the municipal bond, the city's Mayor, Aisha Kairabo Kacyira.

Kacyira said no new timeframe for issuing the bond, which has been postponed three times since September 2008 has been set. 

Also the city council has halted expropriation of the residents in slum areas until next year. Analysts have viewed this move as an indication that the city does not have the money to compensate families it would relocate. 

"Halting expropriation is a clear gesture that Kigali City Council does not have money to compensate families it would relocate. This clearly tells you why the bond may not be issued this year," a source who preferred anonymity told East African Business Week.

The source also pointed out that the move is another indication that the municipal bond may not be issued this year.

Plans for Kigali city to issue a Rwf5 billion (US$8,457,994) municipal bond to raise money to support infrastructure development in the city emerged mid 2008 with September that year as the issue date. 

Unfortunately, the September deadline was not met and a new deadline was set for April 2009, but that also failed. The council wants money to expropriate slums, develop the land and sell it to potential real estate developers and other investors while the rest of the land would be preserved for future plans.  

KCC had also picked land as the bond guarantee meaning, that if the council failed to pay back the money raised in the bond, the securitised land would be sold to compensate the investors. 

Kacyira explained that high land prices, expropriation factors and the financial crisis exacerbated the city's plan to issue the bond.   This means that had the city council gone ahead and issued the bond with high land prices and the domestic liquidity crunch; it would have failed to raise the money it was seeking.