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Nigeria’s Federal Government raises N10.5b from Savings Bond Scheme in 18 Months

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On the 27th November, Ms Patience Oniha, the Director General at the Debt Management Office, revealed that the Nigerian Federal Government has raised the sum of N10.5 billion from its savings bond scheme in just 18 months.

Speaking at the African Securities Exchanges Association Conference in Lagos, Ms Oniha was examining the topic of inclusive growth in Africa, primarily pertaining to digital finance, financial literacy, and the democratisation of wealth.

She revealed that this amount had been raised through the creation of the Federal Government Savings Bond in March 2017, which attracted a phenomenal 13,200 retail investors to the market.

The Federal Government Savings Bond and failing financial inclusion

Source: Pixabay

Introduced in March 2017, the Federal Government Savings Bond was developed to boost domestic investor participation in the bond market. Functioning similarly to the RSA bonds offered by the government of South Africa, for example, it is essentially a type of debt-based investment, where money is loaned to the government in return for an agreed rate of interest.

Arguably successful in the realisation of this aim, the programme attracted 13,200 retail investors, who between them raised N10.5 billion. However, Ms Oniha lamented that this sum was minimal when one considered the amount spent by the government on the enlightenment campaign.

She suggested this was an indication of how much still needs to be done to strengthen financial inclusion within the country, and stated that the Federal Government’s target had not actually been met, despite the sum realised.

Ms Oniha further went on to share her insights into what could be done next, stating that one possibility being considered by the Debt Management Office is the potential use of phones – a strategy currently utilised in Kenya. This would allow investors to more directly participate in government securities.

She explained: “The issue around what technology can do in terms of raising capital is extremely important to us. We traditionally… have been serving only a segment of the market – the institutional investors and foreign investors – [and] there is no buy-side from the retail investors because they need to be knowledgeable and familiar to invest in the sovereign bond.”

Looking to technology

Ms Oniha is not the only person to voice such views. Mr Albert Wigwe, the Managing Director of Access Bank Plc, also suggested that larger numbers of people could be reached via technology and its application.

Talking on the topic, he focused on the avalanche of technological changes which the world is currently experiencing, and noted that these could be used to reach more individuals and to enhance the service delivery provided by financial institutions.

He said: “The traditional way to make money is vanishing, so we need to look at other ways to make money and cut cost. We have 65 percent of Nigerians who are youths and they are an important segment of the society. At Access Bank, we are using technology to reach [them] and change how people transact.”

He specifically noted how phones are being used to replace cards and carry out business transactions even in the remotest of areas, suggesting that this is something both governments and financial institutions must take note of moving forward.

Could it be that the entire bonds market is now on the brink of a new and profitable revolution?

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