Nigerian Diaspora Bond – To be or not to be???

I read the economist article this week titled ‘Milking Migrants’* and fully agree that Nigerian emigrants can help us rebuild our country by investing in a Diaspora bond. After I read the article, I was clueless about what a Diaspora bond meant and how it would work… So I did some reading, and a summary of research from the World Bank, simply describes Diaspora Bonds as ‘typically long dated securities to be redeemed upon maturity only’ (Ratha & Ketkar). Depending on how these bonds are structured, there might be no interest payments and they will be offered at a discount. If interest payments are made they can be paid out in local currency as opposed to forex, based on the potential local currency needs of the Diaspora. Diaspora bonds most importantly can fund infrastructure, this is the buzz word in Nigeria today, and we need to diversify the different financing sources to fund the necessary infrastructural development.

As speculatively mentioned in the economist article, the Finance Minister will push this World Bank item onto the Nigerian agenda. In my opinion Sanusi will buy into the endorsement of this product, because it has ‘no interest’ Sharia linked elements, this will be attractive to the Diaspora who wish to invest in Sharia compliant securities.

Would you invest in a Nigerian Diaspora Bond?

I would say a huge YES for two reasons, the Diaspora become more engaged and contribute to the financial/developmental well-being of the country, and secondly it will be an easier pitch to encourage more foreign investment based on external interest. It would send a huge message out to potential foreign investors, that the future outlook is POSITIVE in terms of long term growth and stability.

Nigeria has ‘highly skilled emigrant’ stock, a positive, low levels of governability, a negative, but a lot of enthusiasm and on this basis we can redevelop our nation together.

So I will definitely watch this space and give updates on what happens, and test the World Bank hypothesis that patriotism will drive this form of investment. Criticism will follow based on how the financial team chose to implement and structure this instrument for the Nigerian Diaspora.



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