DMO: Investors Faith In Nigeria’s Economy Remains Strong

By Tosin Olatokunbo

The Debt Management Office, DMO has disclosed that the success of the $4 billion Eurobond issues by the federal government is an indication that investors still have solid faith in the nation’s economy.

The Buhari administration, last week, issued the bond as part of its ongoing drive to raise funds to finance the 2021 Budget deficit.

The bonds pushed the country’s total debt to over $40 billion amidst criticism that the debt will soon become unsustainable. Critics of the government said it should look inward to raise funds, by plugging loopholes, expand the tax net and cut down bogus spending on government bureaucracy.

In spite of public angst against the government for raising the nation’s debt from barely $13 billion in 2015 when President Buhari took power to $40 billion, the DMO which recently urged the government to stop borrowing for consumption, said creditors have not lost interest in the economy.

Patience Oniha, DMO Director-General made this known at a panel session to mark the 30th anniversary of the Finance Correspondents Association of Nigeria, FICAN) in Lagos.

The DMO boss who was represented at the event by Joe Ugoala, Director, Operational/Research Department stated that the government was surprised at the oversubscription of the Eurobond, as the initial plan was to raise just $3 billion.

According to her “In the last edition that we just did where the country raised $4bn, the idea was that we could raise a minimum of $3bn, and we found out that people still have interest in our country.

“Even though we seem to have doubts, the international investors still have faith. They still believe in the fundamentals of this economy. We were asking for $3bn, we ended up having $12.2bn, which was almost 400 percent of what we actually asked for.

“We have to say this because of our approval from the National Assembly which is within the requirement of the Appropriation Act.

“So, what the country took from that outing was $4bn out of the $12.2bn. You can see that there is so much interest in Nigeria’s instrument across Asia, America, Europe, and other parts of the world.

“The country issued three instruments: three tranches of the seven-year instrument, 12-year instrument, and 30-year instrument. What this means is that if private domestic investors go offshore to borrow, their instruments can be priced as of the sovereign.”

She explained that the government decided to look for other sources of capital to fund critical infrastructure across the country.

According to her “There must be creative ways of opening up the system to enable us to bring the private sector, where we can pool the capital to fund infrastructure,” she suggested.

“That has started with what we are doing with the road clean-up infrastructure; with Dangote trying to take care of some roads.

“Some other private sector players will enjoy that tax incentive to encourage them to participate, bearing in mind that the government alone cannot do it.”