Nigeria is planning to introduce a diaspora bond in the United States next year, aiming for monthly remittance inflows of $1 billion, according to the central bank governor, Olayemi Cardoso.
Cardoso noted that Nigerians living abroad are eager to invest and have significantly increased their remittances since the current administration implemented major reforms last year. The diaspora bond, which targets the large Nigerian community in the U.S., could be launched in 2025.
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“Nigerians abroad want to invest not just financially,” Cardoso explained. “Our currency is now very competitive and affordable, making it an attractive opportunity for them to invest in assets and businesses back home.”
Since President Bola Tinubu took office last year, he has had to address a substantial backlog of foreign exchange payments, burdensome fuel subsidy costs, and a tightly regulated naira that stifled investment. Tinubu appointed Cardoso in September 2023; his predecessor, Godwin Emefiele, is currently facing trial for fraud and corruption.
Cardoso emphasized that the central bank’s efforts to rebuild investor confidence are effective, stating that although the naira has depreciated significantly and fuel prices have surged fivefold since Tinubu assumed office, the necessary reforms are yielding results. Remittances rose to $600 million in September, up from $250 million a month earlier this year, and the central bank is optimistic about reaching the $1 billion monthly target.
“I would be surprised if we don’t achieve that by this time next year,” he remarked.
What you need to know about U.S. Dollar Bonds
- U.S. dollar bonds are debt securities issued by entities (like governments or corporations) in U.S. dollars. Investors who buy these bonds are essentially lending money to the issuer in exchange for periodic interest payments and the return of the bond’s face value at maturity.
- Types: Common types include Treasury bonds (issued by the U.S. government), corporate bonds (issued by companies), and municipal bonds (issued by local governments).
- Benefits: They are often considered safe investments, especially U.S. Treasury bonds, due to the stability of the U.S. government. They also provide a predictable income stream through interest payments.
Remittances
- Remittances are funds transferred by migrants to their home countries. These transfers are typically sent to support family members and contribute significantly to the economies of many developing countries.
- Channels: Remittances can be sent through various channels, including banks, money transfer operators (like Western Union), and increasingly through digital platforms and mobile money services.
- Impact: Remittances play a crucial role in poverty alleviation, improving living standards, and fostering economic development in recipient countries. They are often more stable than other forms of foreign capital inflows.
Nigeria’s Context
Diaspora Bond: Nigeria is considering issuing a U.S. diaspora bond to tap into the financial resources of Nigerians living abroad. This bond would allow the diaspora to invest in their home country while earning returns in U.S. dollars.
Target: The goal is to attract $1 billion per month in remittances, which would significantly boost Nigeria’s foreign exchange reserves and support economic development
