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The African Development Bank (AfDB), has reiterated it efforts towards ensuring a help to sell Diaspora bonds to be issued at the international capital market by Nigeria and Rwanda.

Mthuli Ncube, chief economist and vice president of the bank, in an interview with Bloomberg in Cape Town, South Africa, said the bonds will be marketed to people who hail from both countries, but live overseas.

Ncube hinted that Nigeria, which in January issued a $500 million Eurobond and listed it on the London Stock Exchange, has the potential to sell as much as $2 billion of the bonds.

The plan by AfDB, it is believed, is further to the plan announced on February 20, 2011 by Abraham Nwankwo, director-general of the Debt Management Office, about designing appropriate vehicles for attracting funds from Nigerians in Diaspora.

Proceeds of the bond, he told media executives at a breakfast meeting in Lagos would be invested in critical national development priority projects such as housing, power generation and distribution, agriculture, healthcare, education and specialized training institutions, among others.

The issue, beyond being a call to patriotism, he believes, will also enable Nigerians abroad participate in the growth and development of the country, adding that the idea will involve investors taking control of the process, free of government’s interference. Government, he continued, is willing to take investors in the bond as development partners, providing an enabling environment, particularly the legal framework that would guaranty safety and security of the investment. Government, he stressed, is confident that expertise across the world would be come into play, and since the investors are relieving it of the task of providing those infrastructure through the capital market.

“It is their own equity contribution, their own investment, and fears about the possibility of their fingers being burnt (as it did following the stock market meltdown) does not arise, even while they are still taking some kind of risk in this case. They are not lending to government, but pooling resources together to solve some of the nation’s critical infrastructure deficiencies.
We are encouraging them to use the opportunity to invest for themselves and by themselves. This comes with its own challenges,” he stressed.

Such collaboration, which arose from feedbacks during the two interactive sessions held with Diaspora Nigerians in the past, while promoting greater participation in the domestic bond market, Nwankwo noted, is another to encourage the private sector to seek development funds.

This will also further help to make government’s debt suitable in the medium to long-term.

Speaking on “Past, present and future of Nigeria’s public debt management,” the DMO boss noted that managing debt across the world is a very delicate matter, and a double edged sword because when the bond proceeds is well utilized the people gain, and if otherwise, the people loss and still bear the burden of servicing and repaying the debt.

“Debt is not something that you handle casually, but surviving is about managing risks. Government appreciates that borrowing could be tricky, hence the current efforts to improve debt management skills and knowledge across the various segments of the country,” he explained.