Nigeria to launch first Diaspora bond

5 février 2014

Nigeria’s first Diaspora bond is soon to be launched. President Goodluck Jonathan has requested approval from the Senate to increase the original size of the issue by three times: from USD 100 million to USD 300 million. According to President Jonathan, the instrument draws a lot of attention and interest from Nigerian investors. The Diaspora bond issue has been carefully planned: announced in 2011, it is now crafted in the Nigerian 2012-14 Medium Debt Strategy. 

Nigeria is the second African country to solicit its Diaspora. Back in 2008, Ethiopia issued a bond (the Millennium Corporate Bond) for its communities living abroad; an initiative reiterated with its Grand Renaissance Dam bond in 2011 to finance the Nile’s project. Following the Ethiopian example, other African countries explored this financing possibility. Kenya was the first to engage in Diaspora bond in 2011.  It first issued infrastructure bond offered in 2009. Rwanda is expected to be the next country in line for such issuances.

Given the important size of Diaspora remittances in Africa (3% of GDP in 2012), Diaspora bonds could soon become a new, unexploited avenue to get external financing. In 2012, remittances in Nigeria represented USD 21 billion, or more than 7 times the national GDP, according to World Bank data.

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