Country Summary

Macroeconomic performance

The growing importance of services has bolstered growth in the economy. The sector accounts for about half of GDP, dwarfing the 10% from oil and 22% from agriculture. Real GDP growth was an estimated 1.9% in 2018, reflecting a recovery in services and industry— particularly mining, quarrying, and manufacturing. The recovery benefited from greater availability of foreign exchange. Growth in agriculture was lackluster, due partly to clashes between farmers and herders coupled with flooding in key middle-belt regions and continued insurgency in the northeast.

On the macroeconomic front, the delay by parliament in approving the 2018 budget affected implementation and increased fiscal uncertainty by pushing the bulk of spending to the second half of the year. But thanks to oil revenues, a value added tax on luxury items, and a tax amnesty, the fiscal deficit narrowed in 2018, financed mainly by public debt.

By June 2018, the stock of public debt stood at $73.2 billion, up from $71.0 billion in 2017, representing 17.5% of GDP. Despite the increase, Nigeria remained at moderate risk of debt distress. In November 2018, the government issued a Eurobond of $2.9 billion, which reflects its new debt management strategy of prioritizing foreign debt to mitigate the high financing costs of domestic borrowing. Furthermore, relatively strong oil receipts solidified the current account surplus to an estimated 3.7% and bolstered improvements in the terms of trade by about 13% in 2018 alone.

Real GDP is projected to grow by 2.3% in 2019 and 2.4% in 2020 as implementation of the Economic Recovery and Growth Plan gains pace. However, the slide in oil prices from late 2018 coupled with an output cut imposed by the Organization of the Petroleum Exporting Countries poses a downside risk to the economic outlook. Parliament’s approval of the 8.83 trillion naira 2019 “budget of continuity” may also be delayed due to presidential elections scheduled for February 2019.

Tailwinds and headwinds

The outlook depends on the pace of implementing the Economic Recovery and Growth Plan, which anchors Nigeria’s industrialization by establishing industrial clusters and staple crop processing zones to give firms a competitive edge through access to raw materials, skilled labor, technology, and materials.

The Power Sector Reform Program, if effectively implemented, could attract private investment. It targets 10 gigawatts of operational capacity by 2020. But Nigeria needs to reorient its federal budget, currently dominated by recurrent spending, toward more capital expenditure and accumulating savings to sustain social spending.

The federal government has made strides with institutional and governance reforms, including implementation of the Integrated Financial Management and Information System and the Integrated Payroll and Personnel Information System. The enactment of the Secured Transactions in Movable Assets Act 2017 has institutionalized and widened coverage of collateral to stimulate lending to small and medium enterprises. Although Nigeria has a relatively low debt-to-GDP ratio, there is need for fiscal prudence to avoid a debt trap, especially as global interest rates start to rise. Therefore, contraction of new external debt should balance spending needs with capacity to improve the economy’s competitiveness and stimulate growth.

Nigeria accounts for nearly 20% of continental GDP and about 75% of the West Africa economy. Despite this dominance, its exports to rest of Africa are estimated at 12.7%, and only 3.7% of total trade is within the Economic Community of West African States. Nigeria has yet to ratify the Continental Free Trade Agreement, pending the outcome of broad consultations with captains of industry and other stakeholders.

Source: African Economic Outlook 2019

Fixed Income


The government securities yield curve extended to 20 years with seven benchmark points along the curve (1-3-5-7-10-15 and20 years). 

Nigeria is 6th  in the ABMDI 2017 Ranking Report. 

Issuance strategy 

According to the 2012-2015 Medium-Term Debt Strategy, the National Debt Management Framework (NDMF) is designed to further facilitate development of the domestic bond market and attract more foreign investor inflows. Furthermore, the borrowing mix for domestic debt is guided by an allocation of 75% and 25% for long and short term debt, respectively. 

Benchmark issues 

Reopening and auction are the techniques used by the federal government. Issuance of bonds is essentially meant to augment government income. However, the yield curve is important to both investors and government debt managers for appropriate pricing. There are 7 benchmarks maturities: 1-3-5-7-10-15-20 years. 

Yield curve 

Yield curve calculation models 

Financial Market Dealers Quotation (FMDQ) Methodology 

Interpolation methods 

FMDQ Methodology 

Yield curve managed by 

FMDQ OTC Securities Exchange 

Display platform 

Bloomberg and FMDQ’s

Challenges in building an efficient yield curve 

  • Narrow investor base: Nigeria needs to diversify the investor base, in particular to attract non-residents to invest in the domestic sovereign bond markets. 
  • Macroeconomic challenges: especially the ripple effects that arose from volatility in international commodities prices, notably oil. 

Guide to Buying Bonds

Procedures for market participation

A quarterly issuance calendar is available on the website of the DMO. However, the schedule posted may be subject to change.

Bids from bidders whose offers are higher are served first followed by lower bids, until the desired amount is reached. The DMO does not set minimum prices, but may apply a minimum rate in cases where the bid rate does not reflect the operating conditions.

Bids submitted in auctions of FGN Bonds must be expressed for a total amount, at a fixed price and expressed in actuarial rate of return (yield to maturity). Multiple offers are allowed. Tenders must be available for a minimum of N50,001,000 and multiples of N1,000 thereafter. 

The market intermediaries are the only one to quote prices in the secondary market.

Trading system "call over" or "call over trading" has been replaced the Automated Trading System. The prices provided at the NSE correspond to those determined by market intermediaries with the help of a computer network. Bids are received every working day from 11am until execution of those bids.

Settlement cycle

The settlement of the Bond auction transaction is done by the Central Bank of Nigeria through the Scrip less Securities Settlement System (S4).


In March 2010, the government adopted a law exempting all investors to pay tax on income and gains on financial obligations for all categories. This law is effective for 10 years.


Rating Agency Current rating Outlook
Moody’s B2 Stable
Fitch B+ Negative
Standard and Poor’s B Stable

Primary Dealers

Primary Dealers Market Makers (PDMMs), were introduced in 2006 to allow the emergence of a liquid secondary market and dynamic for government securities. Since then, there has been a strong participation of private investors and foreign investors.

The number of PDMMs has been reduced from 20 to 18 in 2012. These are mainly banks and traders appointed by the DMO. The PDMMs are the only players allowed to participate in the primary market for FGN bonds. They participate in the auctions for their own account and on behalf of their clients. They also allow secondary market liquidity by offering ask and bid prices in all market conditions. In other words, PDMMs must also buy or sell at these prices to respond to investors.

Market Restrictions

Openness to international investors

The Nigerian bond market is open to foreign investors. The Government of Nigeria solicits foreign investment and has implemented various reforms to attract higher levels of investment. These include the loosening of controls on foreign investment. 

Capital Controls

Foreign companies and individuals can hold non-naira-denominated accounts in domestic banks. Account holders have unlimited use of these funds, and foreign investors may repatriate capital without restrictions. 

Restrictions on FX and profit repatriation

The Foreign Exchange Monitoring Decree of 1995 opened Nigeria's foreign exchange market. Investors can carry out unrestricted transfers of dividends abroad, less a 10% withholding tax. Companies must provide evidence of income earned and taxes paid before externalizing dividends from Nigeria. 

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