DMO Says Bank Savings Unattractive, As FG Slashes Bonds Investment To N5,000

Director-General of Debt Management Office (DMO), Patience Oniha, said investing in bonds offered by the Federal Government of Nigeria is more profitable compared to saving with Nigerian banks, as FG slashes investment level down to N5,000.

Oniha made this known during the Security Issuance awareness programme organised by DMO and the Federal Government’s stockbroking firm, CSL Stockbrokers Limited.

This comes as the government reviews its bond investment level to N5,000, in a bid to accommodate retail investors in the country, after its previous high investment demand limited participation to mostly banks and pension fund administrators.

In a report by News Agency of Nigeria (NAN), stockbroker, Abiodun Fagbohun, said the cut in investment level will enable non-high networth Nigerians diversify their portfolio, and earn 2% interest per annum.

Fagbohun said the government is creating awareness regarding the new entry level for retail investors, “We should let people know about the product and also make it easy for them to subscribe.”

He added, “We have been to Lagos, Enugu and Ibadan. We will be in Kano next week informing the general public about the availability of this product and how it works.”

Explaining the benefit of the FGN savings bonds, Fagbohun stated, “We created this window through the FGN Savings Bond, whereby retail investors with as low as N5,000 can also participate in the market. For example, if you put about N10,000 in your savings account, you will earn like 2% interest per annum.”

“With the FGN savings bond, you can earn between 9% and 10% interest per annum. It is a good opportunity which was not there for the retail investors before now.” The stockbroker added.

Meanwhile, Fagbohun said the government raising debt in the bonds market isn’t a problem, but ensuring that the money borrowed is judiciously used. Hs said businesses and households take debt as well.

“Nobody has a problem with debt; households take loans; businesses take loans. Such debts should be used for infrastructure projects and for the productive sector of the economy. The government has to make sacrifices and ensure fiscal prudence and continue to ensure that scarce resources are judiciously allocated,’’ Fagbohun said.