It is time again for Nigerians living abroad to think home.
In the age of globalisation, Nigerians in the Diaspora do not have to return
home to contribute to the development of their country. They can do so through
several means and ways. And one of these is to subscribe to the Diaspora Bond
issued by Nigeria’s Debt Management Office, DMO.
The Federal Government of Nigeria (FGN) on June 13, 2017,
through the DMO, commenced road shows in the United States, United Kingdom and
Switzerland, for the country’s first Diaspora Bond of 300 million dollars.
The Director-General of the DMO, Dr. Abraham Nwankwo is
leading the FGN delegation comprising representatives from the Central bank of
Nigeria, Ministry of Finance to the roadshow. The Minister of Finance, Mrs. Kemi
Adeosun is currently engaged with working details of the newly signed 2017
budget – hence her inability to lead the roadshow.
The nation’s debt office, DMO has already filed a
registration statement for the bonds with the U.S. Securities and Exchange Commission.
Documents sighted on the Diaspora Bond indicate that application would be made
for the bonds to be admitted to the official list of the UK Listing Authority
and the London Stock Exchange to ensure that the bonds were admitted to trading
on the London Stock Exchange’s regulated market.
The document added that there would be a series of investors
meetings in the UK, the U. S. and Switzerland from June 13. It further noted
that pricing was expected to occur following the investor meetings and subject
to market conditions. The bonds will be direct general obligations of Nigeria
and will be denominated in U.S. dollars. The international Joint Lead Managers
are Bank of America Merrill Lynch and The Standard Bank of South Africa
Limited, while the Nigerian Joint Lead Managers are First Bank of Nigeria
Limited and United Bank for Africa Plc.
So what are Diaspora Bonds? They are simply bonds issued by
a country to its own citizens’ abroad (Diaspora) to tap in their wealth in the
adopted developed countries. They are essentially a form of government debt
that targets members of the national community abroad. Sale of the bond can be
restricted solely to members of a particular nationality or opened to all
buyers, with nationals receiving a preferential rate.
The bond represents an opportunity for cash-strapped
developing countries to gain access to the financial resources of their
citizens abroad, something that has been tried and tested by two countries with
famously large and industrious diaspora populations- Israel and India. For
governments that have large diaspora populations, the bonds provide an
opportunity to tap into a capital market beyond international investors,
foreign direct investment, or loans. It is an attractive source of funding for
governments that have experienced difficulties raising money on the
international market or attracting investment.
While Nigeria is not among countries unable to raise funds
from the international markets or attract foreign investments, her citizens are
among the largest, and perhaps the richest diaspora populations in the world.
There are over 17 million Nigerians in The Diaspora who send money home
annually for various reasons. The total remittances by such Nigerians ranks
second to the proceeds from petroleum as foreign exchange earners. United Kingdom and United States of America
are said to have over two million Nigerians each.
According to the World Bank’s Migration and Remittances Fact
book 2016, remittances from Nigerians living abroad hit $20.77 billion in 2015,
making Nigeria the sixth largest recipient of remittances in the world.
The report says remittances to Nigeria rose every year over
the last decade from $16.93 billion in 2006 to $20.83 billion in 2014. And in
2016, remittances by Nigerians abroad were over $35 billion. This was the
highest in Africa and the third largest in the world.
The top two sources for Nigerian diaspora remittances in
2015 were the United States ($5.7 billion) and the United Kingdom ($3.7
billion).
Between 2011 and 2014, Nigerians in the Diaspora had
remitted $63.17billion (N10.35trillion) into the country. Analysis of
remittances showed that $11billion (N1.8trillion) was remitted in 2011,
$21billion (N3.44trillion) in 2012, $20.77billion (N3.40trillion) in 2013 and
$10.40billion (N1.7trillion) in the first half of 2014. The global top ten
remittance recipients this year were India ($72.2bn), China ($63.9bn), the
Philippines ($29.7bn), Mexico ($25.7bn), France ($24.6bn), Nigeria ($20.77bn),
the Arab Republic of Egypt ($20.4bn), Pakistan ($20.1bn), Germany ($17.5bn),
and Bangladesh ($15.8bn).
Nigeria tops the top ten remittance recipients in Africa
with $20.77bn, followed by Ghana ($2.0bn), Senegal ($1.6bn), Kenya ($1.6bn),
South Africa ($1.0bn), Uganda ($0.9bn), Mali ($0.9bn), Ethiopia ($0.6bn),
Liberia ($0.5bn), and Sudan ($0.5bn).
This is a huge potential source of funding for Nigeria which
has battled deficits in the national budgets in recent years. The DMO under the
cerebral Dr. Abraham Nwankwo has hit another first-initiative with a potential
to be a game changer. He is leading Nigeria to become the first African country
to experiment with the Diaspora Bond.
It speaks to the synergy within the President Muhammadu
Buhari’s cabinet that all are working together to realise the economic vision
of the government. Kemi Adeosun, the Minister of Finance, had hinted in
February that the Diaspora Bond would be rolled out within the year. The
National Assembly too was brought on board to support and approve it.
Abike Dabiri-Erewa, Senior Special Assistant to the
President on Foreign Affairs and Diaspora has also urged all Nigerians to take
advantage of the first ever Diaspora offer by buying into the bond.
A statement from her office explained that the Diaspora Bond
will be used to raise funds from Nigerians in the Diaspora to finance capital
projects and provide an opportunity for them to participate in the development
of the country.
She said her office as well as Nigerians in the Diaspora was
excited as the first ever Diaspora Bond is being rolled out to the benefits of
Nigerians. She noted that the issuance of the bond was a unique way of
lubricating the interest of Nigerians in the Diaspora to participate in the
developmental projects being carried out by the Buhari administration.
As part of measures to fund capital expenditures, the
Federal Government had in February announced an offer of $1 billion Euro Bond
under its newly-established $1 billion Global Medium Term Note programme. The
DMO has also successfully launched a Federal Government Savings Bond (FGNSB).
*Contributed by Mrs. By Abimbola Johnson, from Abuja.
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