Nigeria Mulls Diaspora Bonds Issuance In 2024
secures $2.25bn loan from World Bank
Nigeria has qualified for processing of $2.25 billion loan from the World Bank at one per cent interest rate.
Plans are also underway to float a Diaspora Bond later this year to attract funds held abroad by Nigerians at home and in the Diaspora.
The Finance Minister, Wale Edun, disclosed these during a joint press conference of the Ministry of Finance and the Central Bank of Nigeria (CBN) at the just concluded Spring Meetings of the International Monetary Fund (IMF) and the World Bank, in Washington D.C.
The loan, described as a grant by Edun, which has already been approved by the Board of Directors of the World Bank, offers a 40-year term with a 10-year moratorium and a nominal one per cent interest rate.
He explained: “If you look at the fact that we have qualified for the processing just this week. The Board of Directors of the World Bank approved a total package of $2.25 billion, which is virtually like a grant, for about 40 years, 10 years moratorium and about 1% interest. So that also is part of the flow you can count.”
Besides, Edun said Nigeria is set to benefit from budgetary support and low-interest funding from the African Development Bank, adding that negotiations with foreign direct investors are also underway, with promising prospects for substantial investment flows into the country.
On concerns about debt sustainability, Edun highlighted the pivotal role of revenue generation.
Specifically, he said oil revenue stands as a primary source, with efforts aimed at maximizing its potential for the benefit of Nigerians.
He said: “President Bola Ahmed Tinubu has set ambitious targets to ramp up oil production, aiming to reach 2 million barrels per day from the current 1.6 million.”
“The increase in oil production is expected to significantly boost liquidity and aid in debt sustainability efforts.
“However, there’s a parallel emphasis on diversifying revenue sources beyond oil. The government aims to increase tax revenue from 10 per cent to 18 per cent of GDP within a few years, while also doubling non-oil revenue to around 22 percent.
“These measures are crucial for enhancing our fiscal resilience and ensuring long-term economic stability.”
Additionally, the Finance Minister said Nigeria is exploring innovative avenues to bolster its foreign exchange supply and attract investment, with a keen focus on remittances from its Diaspora community.
Emphasizing the potential of Nigerians abroad, Edun noted their substantial financial resources, which could contribute significantly to the Nigerian economy. “There are Nigerians abroad, they’re doing very, very well. They have significant funding,” the minister stressed.
“Consequently, he said the issuance of Diaspora Bonds would attract funds from Nigerians living abroad and foreign currency holdings.
These bonds he added, are anticipated to serve as an attractive investment instrument, catering to the financial interests of both Nigerians abroad and foreign investors.
“Diaspora Bonds allow a country to issue foreign-currency debt targeted at nationals living outside its borders, hoping to benefit from a patriotic dividend that offers lower pricing.
“The Finance Minster said: “The government is looking at attracting those funds and capturing those funds through a diaspora type of instrument,” he explained.
“We think that would be a very attractive instrument for Nigerians abroad and for foreign holdings of foreign currency and we look to having a substantive, substantial and successful issue later in the year.”
He said the government is optimistic about the prospects of a successful Diaspora Bond issuance, envisioning a substantive and substantial response from investors.
“Plans are underway to launch the bond later this year, with hopes of securing significant inflows of investment capital to fuel economic growth and development,” he added.
Additionally, Edun said Nigeria targets the largest share of the World Bank’s planned provision of electricity to 300 million more people on the African continent between now and 2030.
“An exciting development from this week’s meetings is the commitment to provide electricity to an additional 300 million people across Africa by 2030.,” he explained.
“This initiative is the result of collaborative efforts between the World Bank and other development partners. Overall, the Nigerian delegation has received positive feedback from their participation at the 2024 World Bank and IMF Spring Meetings.”
