Three banks in the country raised $1.15bn from the international capital market between 2011 and May 2013, following Nigeria’s successful sovereign bond issuance in 2011, the Debt Management Office has said.
The Director-General, DMO, Dr. Abraham Nwankwo, said this in Lagos on Thursday at a public lecture organised by an online newspaper, The Citizen. He, however, did not reveal the names of the banks.
Nwankwo, while speaking on the topic, ‘Paris Club exit and new debt: A growth imperative or avoidable dilemma?’ stressed that it was necessary to highlight the impact of Nigeria’s public debt management operations because the focus had been on the amount borrowed rather than the benefits.
He said the sovereign debt issuance was part of deliberate efforts by the Federal Government to resuscitate the bond market, which had been neglected by successive military governments.
Explaining why a vibrant bond market was important, the DMO DG said, “Even if the Federal Government didn’t need to borrow money to fund projects, there was the need for it to provide debt instruments for the private sector.”
Nwankwo said efforts in that regard made it possible for 20 private companies to raise N200bn from the domestic bond market between 2005 and 2012 to fund the development of the real sector.
Another benefit of the efforts, according to him, is the recognition and endorsement of the FGN Bond market by reputable international financial institutions such as JP Morgan and Barclays Capital.
“In March 2013, the International Financial Corporation issued naira denominated instrument worth $76m in the domestic bond market,” he added.
Nwankwo, who said domestic debt rose prior to the establishment of the DMO because there was no provision for long-term debt, assured Nigerians that the concern of the government was the same as theirs when on the issue of debt.
This, he said, was because the growth of debt was not the objective; rather, it was to boost the economy.
As a result of this, he said that the government had been deliberately reducing its debt for the last four years.
The DMO boss explained that the reason for the rise in borrowing was due to recession, increase in personnel cost as well as special interventions by the government such as the N200bn Commercial Agriculture Credit Scheme, among others.
Stressing that the Federal Government was keen to avoid a debt trap, he said it was ensuring that while funding deficit, it was also solving structural problems in the country by developing instruments for long-term borrowing.
Nwankwo also said all government borrowing was done with the approval of the National Assembly and in line with guidelines, which had been laid down for the purpose.
