The Nigerian government has announced that it is planning to issue a diaspora bond by March 2017. The bond is aimed at raising investments from Nigerians living in the diaspora, and to be used to supplement the Nigerian budget.

President Muhammadu Buhari proposed the $300 million diaspora bond to the Nigerian National Assembly in September 2015. He requested the bond be increased from $100 million to $300 million to enable the government to achieve its External Borrowing Plan for 2016 to 2018. The request was finally approved in April 2016.

Nigeria’s worsening recession has increased the government’s move to explore external funding for its budget as it continues to face a widening deficit. The country has just completed a $1bn Eurobond sale this January to aimed at expenditure funding.

Between January to November 2016, the country received remittances amounting to $35 billion by Nigerians living abroad; making it the highest remittances recorded in Africa and third highest in the world.

The diaspora bond is an opportunity for Nigerians living outside its country to invest in its fatherland and help reduce Nigeria’s current economic crisis. The senior special assistant to the President on Diaspora and Foreign Relations, Mrs Abike Dabiri-Erewa, explained that with at least with 5-10 year maturity and annual dividends between 5-8 percent which is more than bank deposit and certificate of deposit which is within 2 percent, the interest rate is certainly a plus for patriotic investors.

The Director-General of the Debt Management Office (DMO), Dr Abraham Nwankwo, noted that the bonds are exempted from tax denoting a larger income for investors and also serve as an alternative investment to equities, real estate, and bank deposits.

He further explained that bonds can be used as a collateral for borrowing from banks and discounts houses and bonds can be sold either through any of the 21 Primary Dealers Market Makers (PDMMs) licensed by the DMO or on the floor of the Nigerian Stock Exchange.