Kemi Osukoya
February 4, 2016
Nigerian government said that it plans to raise $452.26 million (90 billion Naira) worth in local currency denominated bonds at an auction on February 10, the second of such this year.
The announcement on Thursday by the Debt Management Office, a unit of Nigeria Ministry of Finance, to sell 40 billion bonds in Nairas maturing in 2020 and 50 billion Naira bonds maturing in 2026 at a unit sale of N1,000 per unit, subject to a minimum subscription of N10,000, is part of a progressive economic agenda set by the Buhari administration to revamp and stimulate Nigeria’s economy from its present gloomy situation.
The bonds will be sold through the Citibank Nigeria, Access bank, Plc, Coronation Merchant Bank, ltd, Ecobank Nigeria, First Bank of Nigeria, First City Monument Bank, FSDH Merchant Bank, Guaranty Trust Bank, Plc, Stanbic IBTC Bank, Standard Chartered Bank Nigeria, United Bank for Africa and Zenith Bank.
The move underscores a first of many difficult but necessary decisions, which the government will have to make in order to drive improved profitability and significant savings in the economy.
In recent months, Nigeria, Africa’s largest economy and democracy, has seen its revenues,-which it mostly derives from crude-oil exports, dwindling due to lower oil prices and low oil demands, leaving the once buoy economy vulnerable to external shocks. The country also face a massive infrastructure deficit, large unemployment and has no fiscal savings to sustain its economy.
“The silver lining behind the present gloomy cloud,” Nigeria’s Finance Minister, Mrs Kemi Adeosun said recently in a speech, “is that our challenges have presented us with a unique opportunity and we must seize it.”
The Buhari administration has been looking to diversify the country’s economy away from crude oil with investments focused on driving higher value in agriculture, agribusiness, manufacturing, and industries which will enhance fiscal revenues.
Part of the administration’s recovery efforts to forestall recession are to consolidate public finances, enhance fiscal revenues and restore credit worthiness to the country.
The Nigerian government also plans to use a government expenditure-led growth strategy, combined with a stimulant approach.
Mrs Adeosun said the country’s “economic strategy is to fund the budget deficit and the negative trade balance in a cost effective and efficient manner, which will keep the country within the acceptable debt sustainable ratio that is expected of most emerging economies.”
Earlier this year, Nigerian government announced plans to raise $25 billion Infrastructural Fund from the global community to finance long-term projects – such as infrastructures, road, transportation.
Nigeria’s Vice President, Yemi Osinbajo said the government has received “ considerable favorable interests from some sovereign wealth funds and other nations,” interested in contributing to the fund.
The Fund, which will be managed by Nigeria Sovereign Investment Authority, the agency that manages the country’s sovereign wealth fund, will create opportunities for commercial partners to participate in the building of the nation’s infrastructures alongside the federal government and will generate economic activities and create jobs.
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