Country Summary

Macroeconomic performance and outlook

Real GDP growth was estimated at 2.3% in 2019, marginally higher than 1.9% in 2018. Growth was mainly in transport, an improved oil sector, and information and communications technology. Agriculture was hurt by sporadic flooding and by conflicts between herdsmen and local farmers. Manufacturing continues to suffer from a lack of financing. Final household consumption was the key driver of growth in 2019, reinforcing its 1.1% contribution to real GDP growth in 2018.

The effort to lower inflation to the 6%–9% range faced structural and macroeconomic constraints, including rising food prices and arrears payments, resulting in a rate estimated at 11.3% for 2019.

With fiscal revenues below 7% of GDP, increased public spending widened the deficit, financed mainly by borrowing. At the end of June 2019, total public debt was $83.9 billion—14.6% higher than the year before. That debt represented 20.1% of GDP, up from 17.5% in 2018. Domestic public debt amounted to $56.7 billion, and external public debt $27.2 billion. The share of bilateral debt in total debt was estimated at 12.1%, and that of eurobonds at 40.8%. High debt service payments, estimated at more than half of federally collected revenues, created fiscal risks.

The current account surplus sharply declined due to increased imports, lower oil revenues, and a smaller than expected improvement in capital flows.

Poverty remains widespread. The poverty rate in over half Nigeria’s 36 states is above the national aver- age of 69%. High poverty reflects rising unemployment, estimated at 23.1% in 2018, up from 14.2% in 2016. Low skills limit opportunities for employment in the formal economy. Government social programs—N-Power and other youth empowerment schemes—are meant to address unemployment.

Tailwinds and headwinds

Real GDP growth is projected to rise to 2.9% in 2020 and 3.3% in 2021. It depends on implementing the

Economic Recovery and Growth Plan (2017–20), which emphasizes economic diversification. The central bank of Nigeria’s recent decree that banks hold loan–deposit ratios of 60% bodes well for increasing lending to the real sector. Simultaneously, the retrenchment of gov- ernment borrowing and easing of the risks of lending to small business could lower interest rates and unlock bank lending to the private sector.

An increase in the value-added tax from 5% to 7.5% to shore up domestic nonoil revenues is welcome, though organized labor and businesses have raised concerns of a potential rise in costs. The government also plans to revisit investment tax breaks.

Oil exports have improved, driving up foreign exchange reserves and creating an impetus for the cen- tral bank to intervene in the foreign exchange market. The current account is projected to remain in surplus in 2020, benefiting from improved oil revenues.

Nigeria has many opportunities to transform its economy, particularly in agroprocessing. Special agro- processing zones could promote agroindustrial devel- opment and employment.

But insecurity could deter foreign investors, shrivel the domestic economy, and ultimately dampen pros- pects for economic growth. High unemployment could create social tensions. Rising public debt and associ- ated funding costs could pose fiscal risks if proposed adjustments are not implemented.

Nigeria’s oil exports could be affected by develop- ments in the Middle East. Trade tensions between the United States and China could weaken global growth and lower demand for Nigeria’s products, including oil. Protracted delays in concluding the Brexit deal could accentuate investors’ aversion to emerging markets, including Nigeria, reversing the current upward trend in foreign portfolio flows. Prolonged closure of borders by Nigeria to curb smuggling may affect trade with other countries in West Africa and raise the prices of imported products, especially rice. These risks under- score the need to accelerate structural reforms to pro- mote economic diversification and industrialization to minimize vulnerability to external shocks.

Health sector preparedness

The inadequacy of Nigeria’s health system is reflected in low national testing capacity, estimated at 1,500 persons a day for a population of about 200 million. According to the 2019 Global Health Security Index, Nigeria ranked 96 among 195 countries surveyed. The low ranking reflects the poor state of the health sector and quality of care. About 80% of the nation’s health facilities are are at different levels of oper- ational dysfunction. The proportion of frontline healthcare providers is low, at 20 per 100,000 inhabitants.

Policy responses

On 30 March 2020, the President announced a lockdown of the federal capital territory and Lagos and Ogun states, which was partially eased effective 4 May 2020, under a phased approach of reopening the economy. A raft of fiscal and monetary policy stimulus measures were launched to mitigate the shock of the pandemic to the economy and households. The measures include establishment of the NGN 500 billion ($1.4 billion) credit facility to support health- care facilities, provide relief for taxpayers, and incentivize employers to retain and recruit staff during the downturn —as well as increasing the number of households on con- ditional cash transfers from 2.6 million to 3.6 million. The central bank established a NGN 50 billion ($139 million) tar- geted credit facility and liquidity injection of NGN 3.6 trillion (2.4% of GDP) into the banking system. It reduced interest rates from 9% to 5% on all its applicable interventions and introduced a one-year moratorium on its intervention facili- ties. It is also coordinating a private sector special interven- tion targeting NGN 120 billion ($333 million).

The pandemic presents an opportunity to strengthen the health system’s resilience and stimulate economic growth, which will require additional resources and tar- geted investment. So, financing from development part- ners should be prudently deployed to improve the quality of the health sector as well as undertake structural reforms to build economic resilience against future shocks.

Source: African Economic Outlook 2020

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 

The new Mission Statement for the plan period for the DMO is to meet the Government's financing needs in a prudent manner that supports economic development, while proactively managing the risks associated with the public debt.  The 2016-2019  Medium-Term Debt Strategy is targeting an optimal debt composition of 60% & 40 % for domestic and external debt, respectively,  by progressively incincreasing  the percentage share of external financing, taking into account the need to moderate foreign exchange risk in the short to medium-term. The borrowing mix for domestic debt is guided by an allocation of 75% & 25% for long and short term debt, respectively. The DMO plans to introduce new products with a view to further diversifying the investor-base, boost financial inclusion and national savings culture for increased gross capital formation, create more benchmarks and deepen the domestic and external marketsfor Government securities. The new debt instruments to be introduced, subject to marketconditions, are as follows:

  • Domestic Debt Market: Retail Bond, Inflation-Linked Bond and Domestic Sukuk.
  • International Capital Market: Diaspora Bonds (the process of issuance is on-going) and International Sukuk. 

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 Negative
Fitch B+ Negative
Standard and Poor’s B Stable

Primary Dealers

From August 1, 2018, the list of Primary Dealer Market Makers in Federal Government of Nigeria Bonds licensed by the Debt Management Office is as follows: 

1. Access Bank Plc

2. Citibank Nigeria Ltd

3. Coronation Merchant Bank Ltd

4. Ecobank Nigeria Ltd

5. FBNQuest Merchant Bank Ltd

6. First Bank of Nigeria Ltd

7. First City Monument Bank Plc

8. FSDH Merchant Bank Ltd

9. Guaranty Trust Bank Plc

10.Stanbic IBTC Bank Plc

11.Standard Chartered Bank Nigeria Ltd

12.United Bank for Africa Plc

13.Zenith Bank Plc.

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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