Nigeria is considering issuing diaspora bonds in the United States next year, aiming to secure $1 billion in monthly remittance inflows, according to Central Bank Governor Olayemi Cardoso.
In an interview conducted during a meeting of the International Monetary Fund (IMF) and the World Bank in Washington, DC, Cardoso said that since the current administration launched important reforms last year, remittance contributions from Nigerians living abroad have increased. He emphasized the growing appetite for investment, which has doubled the value of gold.
The proposed diaspora bond would target the United States, which has the largest population of overseas Nigerians, and could emerge as an important financial instrument for the Nigerian government.
“They are keen to invest beyond the financial side,” Cardoso said, adding that the current competitiveness and devaluation of the naira has made local assets and businesses more attractive to diaspora investors. He pointed out that there was.
some context President Bola Tinubu has faced multiple economic challenges since taking office last year, including large unpaid foreign currency payments and rising fuel subsidies.
The investment environment is further complicated by the administration’s strict controls on the naira. Cardoso will be appointed in September 2023 to replace former president Godwin Emefiele, who is currently facing legal issues related to fraud and corruption allegations. Cardoso expressed optimism about the impact the bank’s reform measures will have on restoring investor confidence. Since the Tinubu government took office, the value of the naira has fallen by about 75% and fuel prices have increased five times. Despite these challenges, remittance flows have soared from $250 million a month at the beginning of this year to $600 million in September, with authorities now aiming to reach an ambitious goal of $1 billion. There is. “I’d be surprised if I’m not there by this time next year,” Cardoso said. Nigeria’s foreign exchange reserves exceed $40 billion, and Cardoso suggested the weak naira could be an opportunity to diversify the economy away from its historic dependence on oil. “Currently, our currency is relatively competitive, and countries that have relied heavily on imports should have an opportunity to strengthen their production activities, which they have not been able to do for a long time,” he said.
The central bank will remain vigilant in monitoring inflation and will allow economic indicators to guide interest rate decisions. Cardoso acknowledged that investors are still in the process of assessing the evolving economic environment and stressed that policy coherence is important to attract long-term foreign investment. “Only time will tell if we can stay the course,” he said.
Engagement with investors, rating agencies, and the diaspora provided recognition of the legitimacy of the government’s reform agenda. Cardoso stressed the need for Nigerians at home who have borne the brunt of these changes to understand that the country is on a promising path.
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