Why the Laikipia bond remains a bold template for subnational fiscal transformation and what other counties can learn from it.
KISUMU, Kenya, October 5th -As Kenya’s counties face widening infrastructure gaps, growing development backlogs, and over-reliance on national transfers, the question arises: how can devolved units fund transformational projects sustainably?
In 2021, Laikipia County, under the leadership of then-Governor Ndiritu Muriithi, offered a bold answer; by proposing and securing approval for a Sh1.16 billion infrastructure bond, becoming the first subnational government in Kenya to seek development funding through domestic capital markets.
The goal was straightforward but visionary: to invest in “smart town” infrastructure such as roads, drainage, street lighting, markets, and water for production, and to unlock the county’s economic potential.
More importantly, Laikipia’s initiative demonstrated that counties can, and should, tap innovative financing options to complement exchequer disbursements.
The bond was conceptualized and executed under the leadership of Governor Muriithi, a seasoned economist, former investment banker, and now Chairperson of the Kenya Revenue Authority (KRA). His background in fiscal policy and his current national role reflect a consistent focus on public finance innovation and revenue mobilization, both critical for sustainable development.
Despite the challenges that followed, this bond should be seen not as a failure, but, as a blueprint worth refining and replicating.
A Model of County-Led Financial Innovation
Laikipia’s infrastructure bond broke new ground by showing that subnational governments can engage capital markets responsibly and legally. The county obtained all requisite approvals from the County Assembly, Intergovernmental Budget and Economic Council (IBEC), the National Treasury, and even Cabinet.
The bond complied with the Public Finance Management Act and was backed by a structured, multi-year development pipeline with clear economic returns.
This marked a shift in county-level thinking — from waiting on delayed transfers to crafting self-driven, revenue-backed development solutions.
But even the best-designed financial models can collapse without political maturity and administrative continuity. That’s the real lesson from Laikipia’s experience.
The Danger of Disrupted Continuity
After the 2022 general elections, many of the smart town projects funded by the bond were scaled down, paused, or quietly shelved.
Contractors were left unpaid, works halted, and investor confidence shaken — not due to mismanagement or financial constraints, but due to a change in administration.
Innovations like the Laikipia bond must be seen through to their logical conclusion, regardless of changes in leadership.
When visionary projects are abandoned with every electoral cycle, counties lose more than momentum. They lose credibility with citizens, investors, and future development partners.
To safeguard such progress, counties must institutionalize long-term projects through legislation, inclusion in County Integrated Development Plans (CIDPs), and cross-party consensus. Vision should never be tied to one governor’s term.
A Playbook for Other Counties
Firstly, Laikipia’s journey offers a valuable roadmap for other counties that wish to unlock market-based financing and achieve fiscal independence by starting with bankable, impactful projects.
“Investors want to see infrastructure that stimulates local economies and can indirectly or directly support debt repayment.”
Secondly, build cross-party and legal continuity by embedding major projects into legally binding fiscal frameworks and ensure incoming administrations respect them.
It is vital to ensure clean, audited, and transparent books of account as no investor will support a county with chaotic finances.
During Muriithi’s tenure, Laikipia invested in robust financial management systems and compliance, earning it the credibility to issue a bond.
Devolved units can strengthen their Own Source Revenue (OSR), as sustainable financing depends on a county’s ability to generate and manage its own revenue.
Laikipia digitized revenue streams, broadened the tax base, and reduced leakages — reforms that were critical in building investor confidence and ensuring a predictable repayment path.
In Laikipia, this effort was supported by the institutionalization of the Laikipia Revenue Board, a semi-autonomous entity established through legislation to manage county revenue collection.
By removing direct political interference and professionalizing revenue administration, the board helped improve efficiency, transparency, and accountability which are all essential for counties looking to access long-term capital.
Other counties would benefit from creating or strengthening similar revenue boards, with clear mandates and oversight mechanisms embedded in law.
In addition, this can be achieved through engaging citizens and always communicating clearly.
“Public participation builds trust. Citizens must understand what the funds will do, how they’ll be repaid, and why such innovations matter.”
Counties are not just administrative units — they are corporate entities with legal obligations and reputational risk. To access private capital, they must demonstrate professionalism, fiscal discipline, and stability beyond politics.
Reviving the Spirit of Devolution
The Kenyan Constitution promulgated in 2010, envisioned devolved units as engines of grassroots development with the capacity to plan, finance, and implement based on local priorities.
But for this vision to succeed, counties must go beyond waiting for Nairobi’s disbursements.The national government should support such innovation by providing guarantees, streamlining approvals, and offering technical assistance. But, the bold thinking must start at the county level.
Under the stewardship of Governor Muriithi, Laikipia took that bold first step. That he now chairs the KRA is no coincidence, it’s a testament to the value of smart, structured, and transparent fiscal leadership.
The Laikipia bond should not be remembered for its political turbulence, but for the precedent it set.
It remains a milestone in Kenya’s fiscal devolution journey one that other counties must build on, not abandon. Now is the time to pick up that baton — and run with it.
Paul Njenga is the Chief Executive Officer Kisumu Lakefront Development Corporation (KLDC).
