Why we’re floating Savings Bond for Nigerians –DMO

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From Iheanacho Nwosu, Abuja

The Debt Management Office (DMO) has explained that it wants Nigerians to be actively involved in the growth and development of the country’s infrastructure and secure prosperity for all through its latest revolutionary initiative – Federal Government Savings Bond.

Director General of the DMO, Dr. Abraham Nwankwo, who made this known at a breakfast briefing with journalists in Abuja on Tuesday, explained that the Savings Bond, which is within the 2016 budget borrowing instrument will be for as little as N5,000 and a maximum limit of N50 million.

The aim of the Savings Bond, which has a tenor of two-three years is to not only leverage on the saving culture of Nigerians and promote financial inclusion but to also help in wealth creation, and increase access to funds available for investment in the economy.

The DMO boss further stated that subscribers stand to gain dividend twice in a year and that once the bond is floated, it would run for five working days to allow more Nigerians take advantage of the opportunity.

“The Federal Government Savings Bond will have a competitive fixed rate, which will be announced by the DMO on the first working day of every month or as may be determined from time to time.

“Subscription shall be open same day the price is announced and investors will have five working days to put in their subscriptions through the distribution agents,” while hinting that the offer would come on stream before the end of the first quarter of 2017.

On the recent successful floating of $1 billion eurobond, Nwankwo said it was a bold step by the administration despite negative forecasts by analysts while expressing satisfaction that government went ahead to beat all expectations with the level of oversubscription recorded.

He said the success of the eurobond shows that the country’s economy is resilient despite teething economic challenges, and was confident that it would motivate other investors to take advantage of the huge potential and prevailing openness and transparency of the present administration to invest in the country.

According to him, with the bond floatation “in the next five years or so, Nigeria’s economy will have substantially moved to a position of diversified exports and public revenue, the maximum domestic satisfaction of aggregate demand and self-sustainability. Under that condition, the appropriate public debt management strategy, with particular reference to the relative weights of the domestic and external components of the public debt portfolio, will be quite different from what it is today.’’

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