DMO Signals Fiscal Shift: Nigeria Targets N7.04 Trillion in Domestic Borrowing for 2023

Infostride News: Patience Oniha, the Director-General of the Debt Management Office (DMO), recently highlighted Nigeria’s success in raising its domestic borrowing to the tune of N7.043 trillion for the year 2023. In an interview with CNBC Africa on the sidelines of discussions for the African Debt Managers Initiative Network, organized by the African Development Institute of the African Development Bank in Abuja, Oniha emphasized the robust demand for federal government securities.

Speaking about the positive market dynamics, Oniha pointed to the depth of the market and the increasing influx of funds into systems and institutions engaging with federal government securities. Notably, she mentioned the strong participation of institutions such as banks, asset managers, pension funds, and insurance companies, whose growing balance sheets contribute significantly to the subscription rate of the Federal Government of Nigeria’s (FGN) securities.

In response to inquiries about the 2024 outlook for the local and international debt market, Oniha expressed satisfaction with the N7.043 trillion domestic borrowing achievement in 2023, comparing it to the N3.5 trillion of the previous year. She highlighted the market’s depth as a key factor enabling such substantial fundraising, signifying the confidence investors have in Nigeria’s economic prospects.

Oniha’s optimism extends into the new year, with expectations of continued liquidity based on the sustained subscription rate of FGN securities. The diverse investor base and the consistent participation of major financial institutions contribute to the positive outlook for Nigeria’s debt market.

Providing some context, it’s worth noting that in September, the Debt Management Office (DMO) reported a significant surge in Nigeria’s overall public debt to N87.38 trillion by the end of the second quarter. This marked a substantial increase of 75.29%, equivalent to N37.53 trillion, compared to the N49.85 trillion reported at the end of March 2023. Notably, domestic loans accounted for N54.13 trillion, representing 61.9% of the entire debt portfolio.

The Debt Management Office has been actively offering a range of securities to investors interested in Federal Government of Nigeria (FGN) bonds. These financial instruments have gained considerable traction among investors, reflecting their confidence in the stability and attractiveness of these securities.

In a recent development, the FGN Sukuk bond, issued in October, witnessed overwhelming demand, surpassing expectations with a subscription rate of 435%. Initially slated to raise N150 billion, the bond realized an impressive N652.82 billion. This success further underscores the appeal of FGN bonds in the investment landscape.

Moreover, FGN’s long-term 30-year bonds have also garnered positive attention from the investing public. In the November auction, these bonds were oversubscribed by over 300%, raising N330 billion compared to the target of N90 billion. This heightened interest indicates investors’ confidence in the long-term stability and returns associated with FGN securities.

As Nigeria continues to navigate its economic landscape, the positive performance in domestic borrowing and the enthusiastic response to government securities underscore the resilience and attractiveness of the country’s debt market. The concerted efforts of the Debt Management Office, coupled with growing investor confidence, bode well for Nigeria’s economic recovery and sustainable fiscal management. The positive trajectory in domestic borrowing is a testament to the market’s depth, providing a solid foundation for the country’s financial resilience in the face of evolving economic challenges.