Business
Naira Strengthens As Investors Buy Nigerian Debt
The naira strengthened, barring a weekly loss, as foreign investors brought dollars into the country to buy Nigerian debt after sales this week.
The currency of Africa’s biggest oil producer gained 0.2 per cent at N157.2 against the dollar in Lagos, the commercial capital. The naira has depreciated less than 0.1 per cent this week, according to data compiled by Bloomberg.
The Governor, Central Bank of Nigeria, Mr. Lamido Sanusi, said relative stability in the currency might be attributed to more foreign exchange from oil companies and investor inflows.
The bank kept its benchmark interest rate unchanged at a record high 12 per cent for an eighth monetary policy meeting on January 21.
“This week we have again seen the strength of investor demand for naira debt instruments,” analysts at FBN Capital Limited, Gregory Kronsten and Olubunmi Asaolu, said in a statement.
“Nigeria has become a favourite of the offshore fixed-income investor despite the yield compression of about 500 basis points on Federal Government naira bonds since August.
“We see another 100 basis points in the next three months, and single digits by year-end,” the statement added.
Nigeria’s Debt Management Office (DMO) sold N110bn in bonds on January 23, with yields on January 2022 notes declining to a record low of 11.34 per cent.
The central bank sold N164.8bn of treasury bills the same day, with demand at double the supply.
The inflation rate will be slower in 2013 compared with last year and may be close to 10 per cent in January, Sanusi said in a recent interview at the World Economic Forum in Davos, Switzerland.
Inflation in December eased to 12 per cent, from 12.3 per cent in the previous month, as the effects of flooding that damaged agricultural output last year began to subside.
The yield on Nigeria’s 16.39 per cent domestic bonds due January 2022 rose seven basis points, or 0.07 percentage point, to 11.3 per cent in the secondary market, according to January 23 data on the Financial Markets Dealers Association website.
The yield on $500m of Eurobonds due January 2021 was little changed at 3.765 per cent on Friday.
Edun made the call while speaking at the 2025 Fellowship Investiture of the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos, where he reaffirmed the federal government’s commitment to sustaining ongoing reforms and expanding access to finance as key drivers of economic growth beyond four per cent.
“We all know that monetary policy under Cardoso has stabilised the financial system in a most commendable way. Of course, it is a team effort, and those eye-watering interest rates have to be paid by the fiscal side. But the fight against inflation is one we all have to participate in,” he said.
The minister stressed the need for banks to broaden credit access and finance innovation-driven enterprises that can create jobs for young Nigerians.
“The finance and banking industry has more work to do because we must finance their ideas, deepen the capital and credit markets down to SMEs. They should not have to go to Silicon Valley,” he said.
The minister who described the private sector as the engine of growth, said the government’s reform agenda aims to create an enabling environment where businesses can thrive, access funding, and contribute meaningfully to job creation.
The facility, known as the Nigeria Actions for Investment and Jobs Acceleration (P512892), is a Development Policy Financing (DPF) operation scheduled for World Bank Board consideration on December 16, 2025.
According to the Bank’s concept note , the financing would comprise $500m in International Development Association (IDA) credit and $500m in International Bank for Reconstruction and Development (IBRD) loan.
If approved, it would be the second-largest single loan Nigeria has received from the World Bank under President Bola Tinubu’s administration, following the $1.5 billion facility granted in June 2024 under the Reforms for Economic Stabilisation to Enable Transformation (RESET) initiative.
The World Bank said the new programme aims to support Nigeria’s shift from short-term macroeconomic stabilisation to sustainable, private sector–led growth.
“The proposed Development Policy Financing (DPF) supports Nigeria’s pivot from stabilization to inclusive growth and job creation. Structured as a two-tranche standalone operation of US$1.0 billion (US$500 million IDA credit and US$500 million IBRD loan), it seeks to catalyse private sector–led investment by expanding access to credit, deepening capital markets and digital services, easing inflationary pressures, and promoting export diversification,” the document read.
The document further stated that Nigeria’s private sector credit-to-GDP ratio stood at only 21.3 per cent in 2024, significantly below that of emerging-market peers, while capital markets remain shallow, with sovereign securities dominating the bond market.
To address these weaknesses, the DPF will support the implementation of the Investment and Securities Act 2025, operationalisation of credit-enhancement facilities, and introduction of a comprehensive Central Bank of Nigeria rulebook to strengthen risk-based regulation and consumer protection.
The operation also includes measures to deepen digital inclusion through the passage of the National Digital Economy and E-Governance Bill 2025, which will establish a legal framework for electronic transactions, authentication services, and digital records.
Beyond the financial and digital sectors, the programme targets reforms to lower production and living costs by tackling Nigeria’s restrictive trade regime. High tariffs and import bans have long driven up consumer prices and constrained competitiveness, particularly for manufacturers and farmers.
Under the proposed reforms, Nigeria would adopt AfCFTA tariff concessions, rationalise import restrictions, and simplify agricultural seed certification to increase the supply of high-quality varieties for maize, rice, and soybeans. The World Bank projects that these measures will help reduce food inflation, attract private investment, and enhance export potential.
The operation is part of a broader World Bank FY26 package that includes three complementary projects—Fostering Inclusive Finance for MSMEs (FINCLUDE), Building Resilient Digital Infrastructure for Growth (BRIDGE), and Nigeria Sustainable Agricultural Value-Chains for Growth (AGROW)—all focused on expanding access to finance, strengthening institutions, and mobilising private capital.