Counties need to be appraised on sustainable practices to enable them tap into the green financing to complete different development projects in the devolved units, a recent study by the Financial Sector Deepening (FSD) Kenya shows.
- The assessment, carried out between November 2022 and May 2023, evaluated economic and fiscal, credit risk, green asset and activity, and green finance capabilities in Embu, Kirinyaga, Kisumu, Laikipia, Makueni, Nairobi, Nandi, Taita-Taveta, Vihiga, and Wajir Counties.
- The credit risk assessment estimated the county government’s relative likelihood of defaulting on its obligations – including a shadow credit rating.
- Green asset and activity assessment was conducted to document availability of green investment opportunities in the selected counties.
“There is a growing knowledge on climate finance and sustainable practices but this needs to be strengthened. Further, counties have expressed an openness to creative green financing structures and have the opportunity to deepen access to the Financing Locally-led Climate Action Program County climate funds,” according to the report published last week.
The study found climate change laws in all counties assessed, and the presence of additional county laws to support implementation of green activities (such as acts related to water and sanitation, waste management etc).
Among the shared challenges in a majority of the counties assessed include a relatively low contribution to Kenya’s GDP as individual units and have fairly undiversified economies. They also all demonstrate a significant dependence on the exchequer, have low own source revenue and low compliance with the Public Finance Management Act. They also fall within the range of medium to high-risk credit profiles with limited financial flexibility and low fiscal autonomy including a high level of pending bills.
Ten Counties Pilot Green Bond Access Option, Report Due Q1, 2024 – Kenyan Wall Street
