• As High bond yields thrill grassroots investors

In spite of the dwindling volumes of trade between Nigeria and India, the country may have nonetheless remained Nigeria’s highest trading partner.

The Foreign Affairs Minister, Geoffrey Onyeama indicated this on Wednesday in Abuja, while hosting a delegation from the Indian Defence College, led by Indian High Commissioner to Nigeria, Amb.  Nagabushana Reddy which came on a courtesy visit.

“India is our largest trading partner at the moment; India is a very important partner in all aspects and we continue to look forward to sustain that,” he told the visiting military officers who were on a three-day world study tour to Nigeria, as part of the curriculum for their Masters Degree in Philosophy (MPhil) programme.

It was noteworthy that the volume of trade between India and Nigeria dropped from 16 billion dollars in 2015 to 12 billion dollars in 2016 due to the fall in oil price.

The Minister, who expressed Nigeria’s determination to strengthen trade relations between Nigeria and India, recalled that the two countries had long term trade relations.

Onyeama told the delegation that the Federal Government had put in place new measures to boost Nigeria’s economy, in addition to other strenuous efforts, towards strengthening Nigeria’s economy and attract Foreign Direct Investment.

Onyeama informed the delegation that when the incumbent administration came on board, it focused on three areas which include security, good governance and anti-corruption as well as job creation.

He said that in its efforts to fast track the process of diversification of the economy, the government adopted policy of economic diplomacy.

“This is where economic diplomacy came up; we realise that we cannot rely on one commodity, we need to diversify and we have to reach out to other countries that we are ready for business

“We also tried to make the environment more conducive for investment; there have been a lot of policies in reaching out to other countries that we are serious for business.

“We have put a lot of policies in place to show to investors and the world at large that Nigeria is ready for business,” Onyeama said

In his remarks, the High Commissioner said the officers were in Nigeria on a world tour as part of the requirements for their military academic qualification.

He said that the visiting officers would leverage on the existing relationship between India and Nigeria to acquire the needed knowledge for their courses.

The leader of the group, Maj.-Gen Mvinaya Chandra, Senior Directing Officer 111, Defence College, India, commended the minister for the lecture he gave them on Nigeria’s foreign policy, saying it had enabled them filled up desired parts.

In the meantime, for investors – both local and foreign – return on investment remains an attraction any day. Hence, when the Federal Government of Nigeria (FGN) Savings Bond for this month’s offer attracted 13.189 per cent coupon, it was seen as unbeatable. It has remained so, especially for commercial banks which hardly offer anything above single digit interest on deposits.

The bonds allow the quarterly remittance of interest income directly into bond holder’s account. The interest paid on the customers’ deposit accounts is monthly and below six per cent per annum.

Savings bonds in Nigeria, as elsewhere, are debt securities issued by the government to help fund development projects. They are debt instruments offered by sovereigns to mobilise resources from the general public, especially individuals and small savers. It offers guarantees that help to stimulate and deepen the savings culture among households, assists in the diversification of funding sources for the government and establishes benchmarks for other issuers. It also encourages financial inclusion across the social and economic strata.

Despite the month-to-month subscriptions to the bonds, stakeholders in the financial sector insist that it does not in anyway, threaten banks’ deposit base. They believe that both the bonds and deposit drives are needed to ensure that more people within the population have access to financial services.

The Group Chief Finance Officer, United Bank for Africa (UBA) Plc, Ugo Nwaghodoh, said the FGN Savings Bond does not pose any threat for commercial banks’ deposit base.

He said the N2.067 billion raised in the maiden offer does not in any way threaten the deposit drive of commercial banks.

“I do not think the FGN Savings Bond will threaten commercial banks’ drive for deposits. The sky is wide enough for all birds to fly,” he said at a briefing on bank’s results in Lagos.

The Chief Executive Officer, Nextnomics Advisory, Dr. Temitope Oshikoya, said the government needs to borrow through local bond issuance to fund the budget. He said the Debt Management Office (DMO) will be involved in the process, adding that the practice where banks end up buying up the bonds instead of lending their deposits to customers is not the best for the economy.

“It will be good to have more people invest in the local bond market. Banks are expected to lend to the private sector, instead of investing so much in the local bonds”, he said.

Oshikoya explained that FGN Bonds serve as risk-free investment with tax-free income. The bonds provide relatively high and stable returns and the principal element (collected at maturity) can be used as collateral for securing credit facilities from banks.

Besides, bondholders that want cash can trade the bonds on the floor of the Nigeria Stock Exchange (NSE) for immediate cash before maturity, even as it qualifies as liquid assets for banks from two years to maturity.

He said that if the debts are well spent, it helps to boost liquidity in the economy and investment in key sectors like agriculture and mining, among others.

A financial expert, Charles Odinaka, said the FGN Savings Bond complements the Central Bank of Nigeria (CBN’s) financial inclusion project.

According to him, the CBN’s financial inclusion vision was aimed at enabling the Nigerian population to know, understand and develop the ability to evaluate financial products/services so as to lower the number of financially-excluded persons within the population, from 46.3 per cent to 20 per cent by the year 2020.

The financial inclusion also broadens the knowledge service providers on the needs of their customers, products and associated risks. The financial inclusion in Nigeria and would continue to work towards this aspiration by extending FGN Savings Bonds to under-banked businesses, communities and individuals across the country.

Odinaka said: “Specifically, the FGN Savings Bonds give investors ease of access to investment opportunities. The investors in the bonds will ultimately become drivers of the economy and eventually contribute their quota to the economic growth of the nation. I foresee a situation where all members, youths, students, traders, name it, operating in the economic space or playing field, do not have difficulty in investing their money because of the benefits that come with the bonds.”

Additional report from Nation