Nigeria is considering the American Diaspora Bond as CBN aims to transfer $1 billion monthly

Nigeria is considering issuing a diaspora bond in the United States next year, aiming to secure a monthly inflow of $1 billion in remittances, central bank Governor Olayemi Cardoso said.

In an interview during the meetings of the International Monetary Fund (IMF) and the World Bank in Washington, DC, Cardoso highlighted the growing appetite for investment among Nigerians living abroad who have doubled their remittance contributions since the current government implemented major reforms last year.

The proposed diaspora bond, which would target the United States – home to the largest population of overseas Nigerians – could become a crucial financial tool for the Nigerian government.

‘They would like to invest more than just financially’ Cardoso noted, noting that the current competitive and depreciated value of the naira has made local assets and businesses more attractive to diaspora investors.

A little context

Since taking office last year, President Bola Tinubu has faced multiple economic challenges, including a significant backlog of foreign currency payments and rising fuel subsidy costs.

His government’s tight controls on the naira have further complicated the investment landscape. Cardoso was appointed in September 2023, succeeding former Governor Godwin Emefiele, who is currently facing legal challenges over fraud and corruption allegations.
Cardoso expressed optimism about the impact of the bank’s reform measures on restoring investor confidence. The naira has lost about 75% of its value since Tinubu’s inauguration, while fuel prices have increased fivefold. Despite these difficulties, cash flows have increased from $250 million per month earlier this year to $600 million in September, with authorities now pursuing an ambitious target of $1 billion. “I’d be surprised if we’re not there this time next year.” Cardoso stated.
With Nigeria’s foreign reserves surpassing $40 billion, Cardoso suggested the weak naira could provide an opportunity to diversify the economy away from its historic dependence on oil. “Now that our currency is relatively competitive, there should be opportunities for those who have been heavily dependent on imports to improve productive activities that have long eluded us,” he noted.

The Central Bank plans to remain vigilant in monitoring inflation and will let economic indicators drive interest rate decisions. Cardoso stressed the importance of policy consistency in attracting long-term foreign investment, acknowledging that investors are still assessing the evolving economic environment. ‘Only time can tell that you can stay on course’ he noted.

Collaborations with investors, rating agencies and the diaspora have provided a sense of validation for the government’s reform agenda. Cardoso underscored the need for Nigerians at home, who have borne the brunt of these changes, to understand that the country is on a promising path forward.