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FG’s $2.86bn Eurobond Oversubscribed by $6.6bn

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NEITI
  • FG’s $2.86bn Eurobond Oversubscribed by $6.6bn

The Federal Government on Wednesday night said it received a combined offer of over $9.5bn for its $2.86bn Eurobond.

This was contained in a statement issued by the Media Adviser to the Minister of Finance, Paul Ella Abechi.

It said the bond was issued under its Global Medium Term Note Programme.

The bond represents Nigeria’s sixth Eurobond issuance, following issuances in 2011, 2013, two in 2017 and one in early 2018 and its first triple-tranche offering.

The offering, according to the statement, has attracted significant interest from leading global institutional investors resulting in an oversubscription rate of about 300 per cent.

It said the oversubscription demonstrated the on-going confidence of international capital market investors in the Nigerian economy.

The statement said despite significant oil and macroeconomic volatility, Nigeria had successfully raised its external debt requirements for the 2018 budget at a cost considerably lower than many of its peers across Sub-Saharan Africa.

The statement said the offer comprised a $1.18bn seven-year series, $1bn 12-year series and a $750m 30-year series.

It said the seven-year series would bear interest at a rate of 7.625 per cent, while the 12-year series would bear interest at a rate of 8.75 per cent.

It added that the 30-year series would bear interest at a rate of 9.25 per cent.

In each case, the ministry of finance explained that they would be repayable with a repayment of the principal on maturity.

The offering is expected to close on November 21, 2018, subject to the satisfaction of various customary closing conditions.

The ministry in the statement said the government intended to use the proceeds of the bond towards funding its fiscal deficit and other financing needs.

When issued, the bond will be admitted to the official list of the United Kingdom Listing Authority and available to trade on the London Stock Exchange’s regulated market.

The statement said the pricing of the bond was determined following a series of meetings with investors in London and conference calls with investors globally which was attended by top government officials.

Some of them are the Minister of Finance, Zainab Ahmed; the Minister of Budget and National Planning, Senator Udo Udoma; Central Bank of Nigeria Governor, Godwin Emefiele; Director-General of the Debt Management Office, Patience Oniha; and Director-General of the Budget Office of the Federation, Ben Akabueze.

Commenting on the successful pricing of the bond, the finance minister said, “Nigeria is investing strategically in critical capital projects to bridge our infrastructure deficit, provide a better operating environment for the private sector, and improve the standard of living of our citizens.

“The proceeds of this issuance will provide critical financing for projects in transportation, power, agriculture, housing, healthcare and education as well as the capital elements of our social investment programmes. Nigeria’s Economic Recovery and Growth plan is delivering results.”

The statement also quoted the DG of DMO to have said that Nigeria’s continued ability to access the international markets to raise capital was a testament to investor’s confidence which had been supported by continuous engagement with them on various reform initiatives and outcomes.

“The issuance of the Eurobonds, which received the prior approval of the Executive and Legislative arms of government, will not only provide capital to finance various projects, but also contribute towards the achievement of the Debt Management Strategy.

“The ability to raise $2.86bn, which is the exact amount the government needed in volatile and challenging market conditions, has been described as a stellar outcome,” she added.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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COVID-19, Security Issues Slow Down Financial Inclusion Program -CBN Report

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CBN Says COVID-19 and Insecurities Slow Down Financial Inclusion Program for 2020

A report released on Monday by the Central Bank of Nigeria and the Enhancing Financial Innovation and Access has revealed that Nigeria is far behind in its pursuit of financial inclusion target for the year.

In the report titled “Assessment of women’s financial inclusion in Nigeria” for December 2019 period released yesterday, September 28, 2020, financial exclusion stands at 36 percent for women while it stood at 24 percent for men.

However, despite the decline in the financial exclusion of women, the report noted that financial inclusion has not really improved and the gap between women and men has grown due to COVID-19 and insecurities in the North part of the country.

Also, the report noted that the financial inclusion gap between women and men in Nigeria stood at 20 to 30, placing the nation below its peers.

The report reads in part, “Not surprisingly, financial exclusion stands at 36 per cent for women and 24 per cent for men.

“The relative gender gap related to financial inclusion is ~20-30 per cent, placing Nigeria below its peers.

“Since 2012, although women’s exclusion has dropped, the gender gap has grown, revealing that men’s inclusion has improved more rapidly than women’s.

“The National Financial Inclusion Strategy was launched in 2012 to reduce financial exclusion to 20 per cent of the adult population.

“However, according to the revised NFIS, Nigeria is not on track to achieve its 2020 targets.”

The report added that the progress towards a broad-based financial inclusion had been slowed down enormously by a series of unforeseen socioeconomic factors, the security situation in Northern Nigeria, COVID-19 and slow adoption of digital financial services.

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Kenya Bankers Association (KBA), Huawei Ink Partnership Agreement to Promote Tech-Driven Financial Inclusion, Fintech Capacity Building

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Partnership seeks to promote tech-led financial inclusion as well as Fintech ICT Capacity; The two organizations have convened a summit on ICT and financial inclusion.

The Kenya Bankers Association (KBA) has signed a collaboration agreement with tech-firm Huawei-Kenya that seeks to deepen financial inclusion in the banking sector through further deployment of technology and building fintech capacity.

In the partnership, KBA will work closely with Huawei-Kenya to spearhead industrywide capacity building initiatives aimed at promoting knowledge on financial technology innovation, digital transformation, and other ICT-related programmes in the banking industry.

Under the partnership, KBA and Huawei will also aim to promote financial inclusion activities in line with the KBA Strategic Plan for the period 2020 to 2023. Launched last year, the Plan seeks to promote access to affordable financial services through tech-aided operational efficiency.

Speaking during the signing of the agreement, KBA Chief Executive Officer Dr. Habil Olaka said the cooperation would go a long way in promoting the delivery of efficient banking services in Kenya through knowledge-sharing programmes that will be organized by the two institutions.

“This partnership will further focus on research and knowledge-sharing activities, which will supplement the research initiatives that continue to be spearheaded by the Association’s Centre for Research Financial on Markets and Policy®. In this regard, the collaboration will certainly augment KBA’s and member banks’ knowledge base in engagements with diverse stakeholders from a fact-based perspective,’’ Dr. Olaka added.

The partnership comes on the heels of the the 2020 edition of the Huawei-KBA Online FSI Summit slated for 30th September this Year. The forum is among the initiatives Huawei and KBA are jointly implementing to promote the delivery of efficient banking services through technology under the cooperation agreement.

Huawei-Kenya Chief Executive Officer Mr. Will Meng welcomed the partnership, saying technology will remain a core driver towards enhancing convenient access to financial services in light of disruptive occurrences such as the ongoing Coronavirus Disease pandemic.

‘’The theme of the upcoming summit is ‘’Building Banking Core Competence through Digital Transformation to Accelerate Inclusive Finance’’. It is one of the initiatives we are rolling out in Kenya in partnership with the Association to ensure we optimally leverage on technology to achieve affordable and accessible financial services in the regional economy,’’ said Mr. Lee.

The summit comes at a time when the global economy is coping with the impact of the Coronavirus Disease. Dr. Olaka noted that the banking industry has continued to tap into the potential of technology to uphold business continuity and supporting customers, a culmination of efficient deployment of technology by the banking sector during this period.

“Beyond the COVID-19 disruption, we see technology as an invaluable enabler of financial inclusion. I have no doubt that the summit along with the KBA-Huawei collaboration will play a significant role in our collective efforts to entrench technology in our operations and sustain our contribution to the national development agenda,’’ Dr. Olaka said.

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CBN Pursues Expansionary Monetary Policy to Boost Output and Moderate Inflation

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CBN Says it Lowered Interest Rates to Use Expansionary Monetary Policy Boost Output and Moderate Rising Inflation

Following the shocking reduction in the monetary policy rate by 100 basis points to 11.5 percent, the Central Bank of Nigeria has explained the reason for such a decision after months of saying no.

The Governor of the apex bank, Godwin Emefiele said the central bank is pursuing an expansionary monetary policy to abate pressure, up economic productivity and then use expected improved in aggregate supply to moderate the rising inflation rate.

Emefiele said this was necessary to address likely recesssion and contain the rising inflation rate.

He said, “The committee was therefore of the view that to abate the pressure, it had no choice but to pursue an expansionary monetary policy using development finance policy tools, targeted at raising output and aggregate supply to moderate the rate of inflation.

“At present, fiscal policy is constrained and so cannot, on its own, lift the economy out of contraction or recession, given the paucity of funds arising from weak revenue base, current low crude oil prices, lack of fiscal buffers and high burden of debt services.

“Therefore, monetary policy must continue to provide massive support through its development finance activities to achieve growth in the Nigerian economy.

According to the governor, Monetary Policy Committee members were confronted with a policy dilemma after the economy contracted by 6.10 percent in the second quarter and expected to dip again into recession in the second quarter.

It is, therefore, of the view that, if a recession occurs in Q3, the committee would be confronted with proposing policy options in a period of stagflation,” he added.

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