Deputy Finance Minister Miles Sampa has recently been championing municipal bonds. In the one media report he was it was reported that Mr Sampa has "implored local authorities to put their houses in order and start raising finances from Lusaka Stock Exchange instead of endlessly looking up to central government for operations finance... decentralisation could be accelerated if the local authorities started raising finances from the local bourse. The councils... can actually raise their own funds through municipal bonds like it is done in other countries".
Unfortunately, this is another old idea that has never been thought through. The idea was first mooted by MMD administration in 2004. It quickly died quickly due to difficulties in securing assets and income streams from the local authorities. The MMD administration had in fact released K7 billion to selected councils that had set aside land for the construction of houses, with little known about how many even materialised. The bottom line - no bonds were issued!
The problem here is that we are seeing the PF administration now engaging in "policy making in the dark", which characterised the failed MMD administration. Surely before Mr Sampa suggests such initiatives, he ought to check what has happened in the past. If something does not exist, the first question, you ask is "why not?" Most importantly, Mr Sampa needs to check whether the local councils have the necessary assets and future streams of income to avoid the whole thing falling apart again.[view whole blog post ]