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Nigeria Introduces $500 Million Domestic Bond To Stimulate Economic Growth
Nigeria Launches $500 Million Domestic Bond To Boost Economic Growth
The Federal Government of Nigeria is set to launch a $500 million domestic bond on Monday, August 19, marking a significant financial initiative aimed at strengthening the nation’s economy. The bond, which is tax-exempt, offers numerous benefits, including safety and security, diversification opportunities, and a predictable cash flow.
According to Finance Minister and Coordinating Minister of the Economy Wale Edun, the bond is a key component of the government’s strategy to mobilize resources for national development and enhance economic stability. “For those in the diaspora who believe in Nigeria’s economic potential, this bond offers an opportunity to contribute to the nation’s growth and competitiveness,” he said.
The five-year bond, issued at par on a fully paid basis, will provide semi-annual payments and is intended to fund key sectors critical to economic development and revenue enhancement. The bond targets Nigerians both domestically and in the diaspora, as well as non-Nigerians living in Nigeria.
The bond will be listed on both the Nigerian Exchange Group (NGX) and FMDQ Securities Exchange, utilizing existing market infrastructure. The principal repayment will be in US dollars at the end of the term, with all transactions, including interest payments and insurance, conducted in dollars. The bond is backed by Federal Government securities and is open to both Nigerian and non-Nigerian investors.
The minimum investment amount is set at $10,000, with additional increments of $1,000, allowing broader participation. The bond is also eligible for pension fund investments, offering the same tax-exempt benefits as other Federal Government securities.
The bond underscores the government’s commitment to improving external reserves and stabilizing the exchange rate, both critical for economic stability and investment. By increasing the flow of dollars into the economy, the bond aims to strengthen the exchange rate, reduce inflation, and support job creation and poverty reduction. This initiative aligns with broader economic policies aimed at reducing poverty, creating jobs, and stimulating investment.
Nigerian banks’ rush to upgrade their core banking systems has caused confusion and frustration for many customers. With banks upgrading to more secure software, the lack of communication and customer support has left millions unable to access their funds, sparking questions about the bank’s commitment to customer welfare.
Dr. Uju Ogubunka, President of Bank Customers Association of Nigeria (BCAN), emphasized the severe impact of these disruptions, stressing the need for better communication and customer preparedness during such transitions. Banks must strike a balance between technological upgrades and customer service to retain trust, especially in an economy facing devaluation pressures.
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As Nigeria commemorates its 64th Independence anniversary, the stark contrast between celebration and the persistent challenges of corruption, mismanagement, and unfulfilled promises becomes evident.
The editorial revisits historical attempts at reform, such as the Independent Corrupt Practices Commission’s (ICPC) prosecutions and the House of Representatives’ inquiry into the unfulfilled $14.5 million aircraft repair contract. Many of these initiatives have faded from public memory, leaving questions about accountability unresolved.
High-profile corruption cases, including the Halliburton scandal involving alleged bribes of $180 million, highlight systemic failures within the political landscape.
The editorial emphasizes the need for collective action from citizens, civil society, and the media to demand transparency and accountability. It warns that without addressing these entrenched failures, Nigeria’s path toward democracy and good governance may continue to be fraught with unfulfilled promises.
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In a significant blow to Scotland’s energy sector, the 100-year-old Grangemouth refinery is set to close in 2025, citing its inability to compete with modern plants in Africa, Asia, and the Middle East. The refinery’s operator, Petroineos, announced the closure, which will result in the loss of 400 jobs.
Located in Scotland, Grangemouth refinery has been in operation since 1924, making it the country’s oldest and only refinery. However, despite its rich history, the refinery has struggled to remain competitive in the face of mounting global competition. Petroineos, a joint venture between PetroChina Internation al London (PCIL) and INEOS Group, a British chemicals firm founded by billionaire Sir Jim Ratcliffe, has invested $1.2 billion in the refinery since 2011.
However, the company has incurred significant losses, totalling over $775 million during the same period. According to Petroineos, the refinery is currently losing around $500,000 per day and expects a $200 million loss in 2024.
The company’s Chief Executive, Frank Demay, stated that the market for petrol and diesel fuels is expected to shrink further due to the upcoming ban on new petrol and diesel cars within the next decade. “Grangemouth is increasingly unable to compete with bigger, more modern and efficient sites in the Middle East, Asia and Africa.
Due to its size and configuration, Grangemouth incurs high levels of capital expenditure each year just to maintain its licence to operate,” Demay explained. The closure of Grangemouth refinery marks a significant shift in the global oil refining landscape, with modern and efficient plants in Africa, Asia, and the Middle East gaining a competitive edge. The Dangote Refinery in Nigeria, one of the largest refineries in Africa, may have contributed to the decline of Grangemouth refinery.
The refinery will be converted into a fuel import terminal, ensuring Scotland’s energy needs are still met. However, the closure raises concerns about the country’s energy security and the impact on local communities.
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