Nigeria mulls U.S. diaspora bond, targets monthly remittance of $1 bln, cenbank chief says
Adds reserve levels, rate decision views and comments on weak naira
By Karin Strohecker and Libby George
WASHINGTON, D.C., Oct 25 (Reuters) -Nigeria is considering a diaspora bond in the United States next year and is targeting remittance inflows of $1 billion a month, its central bank chief told Reuters on Thursday.
Central Bank Governor Olayemi Cardoso said Nigerians abroad are keen to invest and have already more than doubled the remittances they send home since the current government began sweeping reforms last year.
As a result, a diaspora bond in the United States, home to the largest group of overseas Nigerians, "could be on the horizon" in 2025, Cardoso said in an interview on the sidelines of IMF and World Bank meetings in Washington, D.C.
"They really want to invest ... beyond just financially," Cardoso said of Nigerians abroad.
"Our currency has now become extremely competitive and cheap. So they see the opportunity of taking positions in assets back home and in businesses back home."
President Bola Tinubu took charge of Africa's oil-producing behemoth last year and found a multi-billion dollar backlog of foreign exchange payments, crippling fuel subsidy costs and a tightly controlled naira currency that was hindering investment.
Tinubu appointed Cardoso in September 2023; his predecessor, Godwin Emefiele, is facing trial on charges of criminal fraud and corruption.
Cardoso said the bank's efforts to restore investor confidence were working, and painful reforms, with the naira worth a quarter of its value when Tinubu took office and fuel prices five times as high, are paying off.
Remittances hit $600 million in September, from $250 million a month in spring this year, he said, and authorities are targeting $1 billion a month.
"I would be surprised if we are not there by this time next year," he said.
Reserves are now above $40 billion, and Cardoso said the weak naira could help long-drawn efforts to diversify the economy away from oil.
"Now that our currency is relatively competitive ... there should be the opportunity for those who have relied so much on importation to now beef up the productive activity that has so greatly eluded us over these years," he said.
Cardoso said the bank would be "vigilant" in monitoring inflation and let economic data drive interest rate decisions.
Policy consistency, he said, would lure longer-term foreign investor cash; so far, investors were still testing the system.
"Only time can show that you can stay the course," he said.
Cardoso said his meetings with investors, ratings agencies and Nigerians abroad had provided "an element of validation" to the government's tough choices.
"It is necessary for people back home who have felt the brunt of a lot of these reforms to be able to ... see that we are on the right course," he said.
Reporting by Karin Strohecker in Washington, D.C.; Writing by Libby George; Editing by Amanda Cooper and Clarence Fernandez
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
