TO maximise diasporans’ economic contributions to the Nigerian economy, the federal government said it would issue $500 million in domestic foreign currency-denominated bonds in August.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said this on Thursday, July 25, in Abuja during a quarterly press briefing to review the first half of 2024.
The meeting had the theme ‘Economic Recovery And Growth: Progress and Prospects 2024’.
The minister had earlier informed that the domestic foreign-denominated bonds would be issued in the second quarter (Q2) of the year to shore up supply for foreign exchange and address Nigeria’s volatile currency market.
Providing an update at the meeting on Thursday, Edun said the government needed to attract savings Nigerians held abroad.
“We have an open exchange rate system, it’s not illegal and so we have the issuance of a dollar-denominated security, not depending on the financial architecture of the western world, not depending on the kind of architecture that you use to raise euro bonds.
“We’re using the Nigerian financial system, the Securities and Exchange Commission (SEC), the banking system, the investment bankers to issue $500 million in the first instance that will be available and will attract foreign currency held by Nigerians abroad and anybody else who buys into the macroeconomic reform efforts of President Bola Tinubu,” he added.
He further said the issue is a challenge to the best and the brightest in the financial markets, adding, “It is due to open in the next three to four weeks maximum.”
Recall, the Bola Tinubu administration floated the currency and removed subsidies at the onset of his administration which caused lots of problems for the economy.
For instance, the unification of forex rates hits the national economy through debts, with the profile rising to N121 trillion following the floating of the naira and the resultant devaluation by the Central Bank of Nigeria (CBN).
The devaluation saw the local currency, which was exchanged at N430 to the dollar at the official window before Tinubu assumed office, and as of July 25, 2024, exchanged N1,603/$ at the official window.
To worsen the concern, Nigeria is not meeting up with the supply side of the foreign exchange because of its inability to meet its crude supply of 1.5 million barrels per day as prescribed by the Organisation of Petroleum Exporting Countries (OPEC). This, economic analysts said is affecting the dollar supply to the economy as oil remains the mainstay of the economy.
In addressing these problems, Edun said, the government was not planning to raise euro bonds, adding that moving forward with the idea would depend on the success of the domestic foreign currency-denominated bonds.
“Right now, depending on the success of that issue, there is no talk of looking to go to the international markets to raise the euro bond. It is one of the options that we have. It is the markets are open to us. Our ratings and our performance merit it.
“The market is open to us but we prefer in the first instance to challenge Nigerians to come home with their money and be part of the Nigerian reform success story. That we believe is where the economy is headed,” he further said.
The year 2022 recorded an increase whereby the remittances stood at $20.3 billion and 3.5 per cent of the Gross Domestic Product (GDP) in Nigeria.
In 2023, it witnessed a small decline and amounted to $20.1 billion with a corresponding 3.2 per cent of the GDP.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.