Risks, Rewards And Eurobonds

Published 6 years ago

Life in Nigeria today is like living in a dilapidated caravan, or driving around in a fancy jalopy.

When this sort of accommodation or transportation is your daily reality, then your long-term ambitions become hobbled by the pragmatic quest to simply make it to the next day’s hustle, the next salary, the next windfall or gift from that well-to-do cousin, and perhaps, for businesses, waiting for that large order that may never come. Under these faltering conditions, a balanced diet, quality education, satisfactory healthcare, comfortable and safe transportation, and strategic focus become luxuries.

For most folks, simply existing has become a risk; and for businesses and corporate citizenship, a wasteful pleasure. Phrases like “the economic growth and recovery plan” begin to sound somewhat pretentious. Another government mirage perhaps. Sadly, the disdain for diligence is rife and few Nigerians seem convinced that patriotism has its rewards. The paradox of hoping for affluence has become a pandemic, with citizens, companies and communities prowling around for scarce resources and opportunities like a herd of famished goats. Even government’s uptake of loans – $1 billion from the African Development Bank (AfDB) and $1.3 billion from China’s Exim Bank for rail projects – has not restored confidence in the shaky polity. Another $1 billion World Bank facility is expected to flow into government’s coffers in 2017, says Nigeria’s Finance Minister, Kemi Adeosun.


“The economy is on the path to recovery and confidence in the macro-picture is key,” Adeosun told CNBC Africa anchor Wole Famurewa in February. “Government is focused on investing in the priority areas of power and infrastructure… even as we continue work on payroll clean-ups and efficiency at the state level…”

The dire economy will not stop government from taking its statutory pound of flesh from companies, as oil revenues now represent only 10% of GDP. So, tax reforms will take center stage. At 6%, Nigeria has one of the lowest tax to GDP ratios in the world, with Ghana at 15% and South Africa 24%, Adesoun cautions, warning that “we should be very careful about getting excited about recent crude oil price recovery.”

At the micro level, pervasive poverty, disdain for Abujanomics and the proliferation of dodgy pyramid/Ponzi schemes is the new social order. Camouflaging as financial literacy, network marketing or empowerment programs, they represent on one side, the quest for overnight wealth and absolute disregard for government’s agenda and promissory notes, and on the flip side, the emergence of a new breed of professional charlatans peddling crafty concepts in an increasingly sophisticated economy.  Somebody needs to commission a poll to measure Nigeria’s social desperation index.

In a risk-averse, reward-hungry society such as this, contemporary concepts and capabilities like coding, digital literacy, big data analytics, cybersecurity, the Internet of Things (IOT) and artificial intelligence (AI) are farfetched ideas. Non-profits like the Lagos-based Book Club, which has been promoting the altruistic pleasures of reading books and advocating for a return to the culture of heuristics, seem largely ignored, their activities lost in the babble of personal, communal and corporate survival.


The nation seems to have lost a large portion of its liberal ethos. The number of pepper soup joints and event centers has now surpassed the number of libraries and bookstores in the land. Clearly, the pursuit of leisure and lucre has overtaken the quest for the wealth of knowledge to be found on books – or e-books.

But it is difficult to grow a culture of reading and research when citizens go to bed every night with hunger in their bellies and hyperinflation on their minds. Consumer price inflation peaked at an 11-year high of 17.9% in September 2016 and had neared 19% by February. “2016 was defined by politics and policy spats… our currency and foreign exchange issues led to the economy catching cold. But as we entered 2017 the forex issue moved from being a cold into financial pneumonia stage,” Kayode Oguntayo, a Lagos-based entrepreneur told this writer.

Notwithstanding these issues, Nigeria’s $1 billion Eurobond was eight times oversubscribed during its early hours of trading on the London Stock Exchange last February. The 15-year bond offering 7.875% in trading is the first Nigerian offering since 2013 and the 2015 change of government. Nigerian legislators had last year rejected government’s plan to raise $30 billion through loans.

Could Nigeria be flirting with a new era of economic rejuvenation?