Wale Edun, the finance minister, disclosed this during a
joint press conference of the ministry of finance and the Central Bank of
Nigeria (CBN) at the spring meetings of the International Monetary Fund (IMF)
and the World Bank, in Washington D.C.
According to him, the package, approved by the Board of
Directors of the World Bank, offers a 40-year term with a 10-year moratorium
and a nominal 1 percent interest rate.
“If you look at the fact that we have qualified for the
processing, just this week to the Board of Directors of the World Bank, of the
total package of $2.25 billion of what you can call, I mean, if there is no
such thing as a free lunch, but it is the closest you can get to free money. It
is virtually a grant. It is for about 40 years, 10 years moratorium and about
1% interest. So that also is part of the flow you can count,” Edun said.
He 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.
Responding to concerns about debt sustainability, Edun
highlighted the pivotal role of revenue generation. Oil revenue stands as a
primary source, with efforts aimed at maximising its potential for the benefit
of Nigerians. He noted that President Bola 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 percent to 18 percent 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,” the finance minister
emphasised.
As Nigeria navigates economic challenges, securing
substantial funding and focusing on revenue diversification emerge as key
strategies to drive sustainable growth and mitigate debt risks.
To issue diaspora bond later this year
Nigeria is exploring innovative avenues to bolster its
foreign exchange supply and attract investment, with a keen focus on
remittances from its diaspora community.
Highlighting the potential of Nigerians abroad, the finance
minister 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,” Edun remarked.
To harness these resources effectively, the Nigerian
government is considering the issuance of diaspora bonds, aiming to attract
funds from Nigerians living abroad and foreign currency holdings. The proposed
diaspora bonds are anticipated to serve as an attractive investment instrument,
catering to the financial interests of both Nigerians abroad and foreign
investors.
“The government is looking at attracting those funds and
capturing those funds through a diaspora type of instrument, a diaspora bond.
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,” Edun discloed.
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.
Speaking at the press conference, Olayemi Cardoso, governor
of the CBN, said, “Besides our meetings with multilateral financial
institutions, and foreign investor groups with a keen interest on developments
in Nigeria, including a critical gathering at the US Chamber of Commerce, we
had very productive discussions with leading International Money Transfer
Operators (IMTOs), where we collectively committed to doubling remittance flows
through formal channels into Nigeria in the immediate short to medium term.
This target is both ambitious and achievable, and we’re wasting no time in
setting up a collaborative task force, reporting to myself, to drive progress
and address any bottlenecks that hinder flows through formal channels.”
Targets larger share of World Bank’s electricity for 300m
more people on Africa
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. 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,” Edun said.
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