Nigeria: What Federal Government's Savings Bond Means to Nigerians

May 15, 2017 | Daily Trust; All Africa

The bond is part of the Federal Government's programme to encourage small savers earn more income (interest) when compared to their savings accounts with banks.

Lagos - The Federal Government of Nigeria (FGN) recently launched the Savings Bond, which is being issued by the Debt Management Office on behalf of the FGN. This is part of Federal Government's programme to encourage small savers earn more income (interest) when compared to their savings accounts with banks. Depending on the terms of the bond, the issuer, which is the federal government, is obliged to pay interest (the coupon) and to repay the principal at a later date, termed the maturity. Interest is usually payable at fixed intervals (semi annual, annual, and sometimes monthly). The savings bond has a minimum subscription of N5,000 and a maximum of N50 million. The benefit of this bond is that the interest income from the Savings Bond is tax-free. Since the bondholder enjoys interest every quarter, it makes it possible for individuals to plan and save towards personal projects. The savings bond is considered liquid as it would be tradable on the Nigerian Stock Exchange. It can also be used as collateral for loans, offers guaranteed returns and encourages financial inclusion among low-income households. It enables individuals to enjoy those benefits which accrue to high-net-worth investors in the capital market. While addressing leaders of market unions and leaders of middle income earner organisations in an advocacy/sensitisation workshop on the FGN Savings Bond in Onitsha, the Director General of the Debt Management Office (DMO), Mr Abraham Nwankwo, said the initiative, "FGNSB" is designed purposefully to favour the poor and give them a stake in government. He said that over the years, the federal government had issued bonds, but it remained elitist bonds, which were sold as wholesale bonds to privileged individuals, corporate companies and organisations. "All these super rich individuals bought it as wholesale bond, but the difference we have in the FGNSB is that we are making these bond available to ordinary Nigerians." Read more on All Africa. Source: All Africa