In a bid to finance the budget deficit and manage debt, the Federal Government of Nigeria has successfully raised a substantial sum of N11 trillion through the issuance and auctioning of Treasury bills and savings bonds.
The analysis of data from the Central Bank and the Debt Management Office reveals that between January and April 2024, the government raised N3.1 trillion through FGN bonds and N7.92 trillion through T-bills, bringing the total to N11.2 trillion.
These bonds and bills serve various purposes, including providing investors with a secure investment option, assisting in debt management, and facilitating efficient fund management. They are considered risk-free due to the government’s commitment to honoring its debts, with the ability to print money if necessary.
During this period, the Federal Government conducted several successful auctions. In January 2024, N418.197 billion was raised through four bond auctions, followed by N1.49 trillion from two FGN bond offers in February, slightly below the target of N2.5 trillion. In March, the DMO capitalized on the favorable market conditions, raising N475.67 billion through bond options. The April 2024 FGN bond auction saw the government raise N626.8 billion, indicating a significant increase in market confidence compared to the previous month.
The demand for Treasury bills was also notable, with the January offering of N1 trillion being oversubscribed, attracting N2.3 trillion in investments. The central bank successfully sold N908.7 billion worth of one-year bills out of the N1.8 trillion subscription. The value of T-bills sold across auctions in March 2024 reached N2.69 trillion, marking an increase of N11 billion compared to February 2024 (N2.589 trillion). Additionally, a successful T-Bills auction conducted by the CBN on April 24, 2024, raised approximately N362.45 billion across various maturities, reflecting the market’s appetite for government securities.
These substantial funds raised through bonds and T-bills come at a time when the government aims to finance the N9.18 trillion budget deficit and settle Ways and Means Advances. To this end, the Minister of Finance, Wale Edun, stated that about N4.83 trillion from the proceeds of Nigerian Treasury Bills and Bonds issued in 2024 will be used to offset the debts.
Economists and financial experts emphasize the importance of promoting financial literacy to enable more Nigerians to take advantage of investment opportunities such as treasury bills and bonds. Tajudeen Ibrahim, the Director of Research and Strategy at Chapel Hill Denham, highlighted the low level of financial knowledge among Nigerians as a barrier to participation. He suggested that increasing public awareness and education on financial matters would enhance funding and investment outcomes.
Interested individuals can open investment accounts with portfolio investors, financial institutions, or insurance companies and seek guidance on profitable bond investments based on analyzed data. By investing in bonds and treasury bills, Nigerians can potentially earn higher returns compared to traditional saving accounts, making it a more rewarding option.
It is evident that while institutions like banks, insurance companies, and corporate investors actively participate in these investment opportunities, the challenge lies in improving financial literacy among individuals. The government, alongside supervising authorities like the CBN and the DMO, must continue their efforts to educate the public and create awareness of the benefits and procedures associated with investing in treasury bills and bonds.
