Obinna Chima with agency report
The federal government yesterday expressed optimism that it would sell Eurobond worth around $1 billion to be issued before the end of the year.
The Minister of Finance, Kemi Adeosun who spoke on the move, also disclosed that the government was in the process of appointing managers for the sale.
The Eurobond is part of Nigeria’s plans to borrow a total of N1.8 trillion ($5.8 billion) from abroad and at home to fund an expected budget deficit of N2.2 trillion this year.
“We are appointing parties this week, we are hoping to come before the end of the year,” Adeosun told Reuters at the sidelines of an investment conference at the London Stock Exchange. She gave no details.
“We have headroom and we are very fortunate in that regard, we have very low debt to GDP ratio,” she told the conference.
Adeosun informed her audience that Nigeria had started a journey, which would take its economy from being dependent on oil as a primary commodity, to a more productive economy.
She recently said the Nigerian economy had moved from spending 90 per cent of its budget on recurrent items and only 10 per cent on capital expenditure, to 70 per cent on recurrent expenditure and 30 per cent on capital expenditure.
“From the numbers that we have done, the infrastructure gap that we face, even if we devote our budget for the next three years, it is not enough, so we’ve got to look for creative ways to mobilise additional capital.
“We started of course with spending our own money (pension funds) because we think, of course, that the first thing we have to do is to re-establish some benchmarks, some ability to deliver on roads, on rails, on basic infrastructure,” she said.
According to her, Nigeria’s long-term plan is to mobilise private capital.
“We think the narrative around who pays for infrastructure is a very important one in Africa. I say that because at the moment, if you don’t have infrastructure, you are going to pay anyway. If you spend six hours on a journey that should take you an hour, you’ve paid.
“So we are hungry for infrastructure. We’ve got 170 million people who don’t have power in sufficient quantities, we don’t have a rail system, we don’t have a road structure, we believe that if we solve these infrastructure challenges, the entire productivity chain — agriculture, solid minerals, manufacturing, our unemployment problems — could all be solved.
“Our population is young; we have to provide a standard of living that keeps young vibrant Africans in Africa, because we think that is very important for eliminating poverty,” the minister stated.
Adeosun also said the government had spent N770 billion on capital expenditure since President Muhammadu Buhari signed the 2016 budget in May.
Nigeria’s economy has slipped into recession for the first time in 25 years, brought on by low oil prices that have cut government revenues and weakened the OPEC member’s currency and a lack of clear policy direction that put investors on the edge. Crude oil sales make up 70 percent of national income.
The African Development Bank has said it would help Nigeria to overcome its recession. The lender’s board is expected to grant a $1 billion loan at a rate of around 1.2 per cent, which Nigeria could use to help plug its deficit.
The finance min