FG to raise funds through diaspora bonds in March

With the federal government continuing to source for funding both locally and in abroad, plans are in top gear to issue a debut diaspora bond by March to raise funds from Nigerians abroad, after completing $1 billion Eurobond sale this month.

The largest economy in Africa is in its first recession in 25 years and needs to find money to make up for shortfalls in its budget. Low prices for crude and militant attacks in its crude-producing heartland, the Niger Delta, have slashed its oil revenues.

It first announced plans to sell Diaspora bonds in 2013 to raise between $100 million to $300 million, but the government at the time could not finish appointing book runners for the sale before an election that swept the opposition into office.

The government plans to borrow up to $10 billion, with about half of that coming from foreign sources as it seeks to boost overseas loans to plug funding gaps and lower costs.

So far, only the African Development Bank (AfDB) has publicly confirmed a budget support package of $1 billion. The government has held talks for months with the World Bank, China and other institutions to fund the budget gaps.

In December, the government appointed Citigroup, Standard Chartered Bank and Stanbic IBTC Bank to manage the $1 billion Eurobond sale, which it hopes to begin marketing this month.

Remittances are the second-largest source of foreign exchange receipts in Nigeria, after oil revenues. Citizens living abroad send at least $10 billion home annually.

Nigeria is the world’s fifth-biggest destination for international remittances after China, India, the Philippines and Mexico, with 5 million Nigerians living abroad sending money back to relatives, according to Western Union.

Meanwhile, the Federal Government is auditing the utilization of its bail-out funds to state governments amounting to about N510 billion last year.

Consequently, eight accounting firms have been appointed to review how state governors spent the money and their compliance with stipulations of the Fiscal Sustainability Plan (FSP), which was the basis for the funds.

The firms are KPMG, Ernst & Young, PricewaterhouseCoopers, PKF, Muhtari Dangana & Co, S. S. Afemikhe & Co, Ahmed Zakari & Co, and Ijewere & Co.

Minister of Finance, Mrs. Kemi Adeosun, has said that the accounting firms would evaluate the states based on their implementation of the 22-point FSP.

According to her, the ministry has been monitoring the utilization since last year but found it necessary at this stage to employ independent firms for the “monitoring and verification of the States against agreed milestones under the FSP.”

She said that the firms were “expected to vigorously monitor, evaluate and verify the performance of the states against the agreed milestones set by each State Government under the Fiscal Sustainability Plan.”

The minister warned that state governments that failed to implement the action plans, as stated, would be taken off the facility with immediate effect.

The funds, under a programme of ”Budget Support Facility”, a 12-month standby loan facility, was designed to bring immediate financial relief to State Governments and enable them to meet their financial obligations; with a monthly amount of N50 billion in the first three months and N40 billion available for the remaining nine months to 35 States.

The Fiscal Sustainability Plan is a 22-point reform programme which commenced in June 2016 with requirements including increasing internally generated revenues, the introduction of biometric payroll, publication of audited annual financial statements, and reduction of wastages by establishing efficiency units.

Adeosun introduced the FSP in 2016 to which state governments acceded, with the view to enhancing fiscal prudence and transparency in public expenditure.

The plan is part of the nationwide Public Financial Management Reform which is being implemented by the administration of President Muhammadu Buhari.