The Nigerian government has successfully raised a substantial amount of funds through the issuance of Treasury bills and bonds in the first four months of 2024, demonstrating strong investor confidence in the country’s financial instruments. According to findings, the government raised a total of N11.2 trillion, with N3.1 trillion from FGN bonds and N7.92 trillion from T-bills.
The government’s debt management strategy involves utilizing these bonds and bills to provide investors with a relatively safe investment option, manage the country’s debt profile, and facilitate efficient fund management. Treasury bills and FGN bonds are classified as risk-free, theoretically zero risk, as the government is assumed to always fulfill its debt obligations.
In the first quarter of 2024, the Federal Government raised significant funds through bond auctions. In January, about N418.197 billion was raised from four bond auctions, followed by N1.49 trillion from two FGN bond offers issued by the DMO in February, though below the target of N2.5 trillion. The DMO capitalized on the current rally in rising rates to raise about N475.67 billion in its March bond option. The April 2024 FGN bond auction raised N626.8 billion, approximately 32% higher than the March auction, indicating strong market confidence in the government’s creditworthiness.
The T-bills market also witnessed substantial investor interest. In January, a total of N1 trillion was on offer but was oversubscribed as investors staked a whopping N2.3 trillion. The one-year bill on offer for N600 billion recorded a massive N1.8 trillion subscription, out of which the central bank sold N908.7 billion. The DMO sold bills valued at N2.69 trillion across its auctions in March 2024, an increase of N11 billion compared to February 2024 (N2.589 trillion). The CBN also conducted a successful T-Bills auction on April 24, 2024, where about N362.45 billion was raised across various maturities.
The raised funds are crucial for the government’s plans to finance the 2024 budget deficit of N9.18 trillion and settle the Ways and Means Advances. Approximately N4.83 trillion from the proceeds of Nigerian Treasury Bills and Bonds issued in 2024 has been allocated to settle the Ways and Means Advances from the CBN.
Experts suggest that increasing financial literacy among Nigerians could further boost investment in these instruments. Tajudeen Ibrahim, the Director of Research and Strategy at Chapel Hill Denham, noted that many Nigerians are not taking advantage of treasury bills and bonds due to low financial knowledge. He emphasized the importance of improving public awareness of financial literacy and investment opportunities to increase funding.
To invest in bonds and treasury bills, interested individuals can open an investment account with portfolio investors, financial institutions, or insurance companies. These institutions can provide guidance and instructions for investing in profitable bonds based on observed data and analysis. Investing in bonds and treasury bills offers higher returns compared to keeping money in a savings account.
The successful issuance of Treasury bills and bonds highlights the Nigerian government’s efforts to diversify its funding sources and manage its debt effectively. By promoting financial literacy and providing accessible investment opportunities, the government can further strengthen investor confidence and support economic growth.