By Emma Ujah, Abuja Bureau Chief

After a fulfilling career in the banking sector, spanning over 22 years, Ms. Patience Oniha moved from the private sector to the public sector when she joined the Debt Management Office (DMO) in 2008 as Director, Market Development Department. In this capacity, she brought her banking experience to bear on various aspects of the organisation’s activities with a view to deepening the Nigerian capital market and to make it create necessary avenue that both government at various levels and the Organised Private Sector (OPS) could access long-term funds for infrastructure development and business expansion, respectively.

Consequently, she introduced the Benchmark Bonds to develop the domestic bond market in order to improve liquidity and to create a sovereign yield curve which created opportunities for State Governments, Multilaterals and Corporates to raise long term funds. For sustainable development of the debt capital market, she actively engaged with local and foreign investors, regulators and other stakeholders to develop a large and diversified investor-base for FGN Securities and Bonds issued by other borrowers.

She successfully managed the issuance of Nigeria’s debut $ 500 million Eurobond in January 2011 which opened a new source of funding for the Federal Government and Corporates. In 2013, she also managed the issuance of the dual-tranche $1 billion Eurobond which was over-subscribed by, as much as, 400%.

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A number of Nigerian banks also tapped into this funding window by issuing Eurobonds. Ms. Oniha was also responsible for the inclusion of FGN Bonds in the J.P. Morgan Government Bond Index – Emerging Markets (GBI – EM) in October 2012 which made Nigeria the second country in Africa, after South Africa to have its local currency sovereign bond included in the Index. The inclusion of FGN bonds in this Index attracted foreign investors to the domestic bond market as a whole. This was followed by the inclusion of FGN Bonds in the Barclays Capital Emerging Markets – Local Currency Government Bond Index (EM – LCBI) in March 2013.

While still at the DMO, Ms. Oniha was appointed as the Head of the Efficiency Unit at the Federal Ministry of Finance. To execute the mandate of the Unit she was to moderate the Government’s Overhead Expenditure and generate savings from the procurement process.  She introduced a number of initiatives. Amongst them were the issuance of 7 Circulars to control expenditure on specific Overhead items and the negotiation of discounts with airlines. These delivered savings estimated at N17 billion to the Government. She was working on the introduction of new processes for payment and procurement when she was appointed Director-General of DMO with effect from July 1, 2017.

Her return to the DMO as D-G coincided with the turbulent low revenue profile of the federal government which exposed the nation to borrowing to sustain the economy.  The nation’s economy had been confronted by a poor revenue profile as far back as 2016 when the prices of crude oil collapsed in the international oil market.  The economy went into a recession, as a consequence.  The then Minister of finance, Mrs. Kemi Adeosun had argued that the nation was faced with the option of borrowing to spend itself out of the recession or risked doing nothing and allow the economy to totally collapse.

The President Muhammadu Buhari government has had to battle with this problem of low revenue ever-since.  That the nation came out of recession in 2017, notwithstanding, the decline in revenue and its inability to meet government obligations has persisted with mounting debts requiring an expert for the management.

When Ms. Oniha took over, one major problem in the capital market was the complaint that the federal government was crowding out the private sector from accessing funds from the market.  The rates were also considered too high to be attractive to them.

Consequently, Ms. Oniha and her team had to explore opportunities for funds outside the shores of the nation and to also come up with initiatives that would reduce the cost of funds even to the federal government.

It was in the realization of the goal that she decided to reduce the percentage of domestic borrowing and increase foreign borrowing.  Funds sourced, especially from the multilateral organizations such as the World Bank, the African Development bank and other similar institutions are often cheaper than borrowing from the domestic market.

This policy remained in force until last year.  However, the COVID-19 pandemic disrupted the government overall international borrowing plan.  Consequently, the government had to fall back on the domestic market this year.

As part of its Strategic Plan the DMO also developed alternative instruments for raising finance for development and attracting a wider pool of investors.

One of these is the issuance of Sovereign Sukuk, a non-interest financing security in the domestic debt market which is not only serving as an alternative source of financing for the government,  but also facilitating the mobilization of idle funds and more efficient allocation of resources within the economy.

Another consideration for the issuance of non-interest financing securities by the government is the need to establish a non-interest financing securities benchmark yield curve, which will serve as a reference for the pricing of related non-interest financing securities by other issuers, especially the private sector. Proceeds of Sukuk are applied in such a manner that they are project-tied and as such demonstrates transparency in the utilization of borrowed funds.  In the last three years, funds realized from Sukuk issuance have been applied to the construction of roads and bridges across the six geo-political zones of the country.

The impacts are re-assuring with more investors taking interests in Sukuk which has consistently witnessed over-subscription.