To Attract Dollar Inflows, Strengthen Naira, FG Plans $10bn Diaspora Fund
*Currency appreciates to N1,380/$ on parallel market, now N1,339/$ on official window
James Emejo in Abuja and Nume Ekeghe in Lagos
As part of efforts to attract and accelerate inflow of foreign currency into the economy, the federal government has unveiled plans to float a $10 billion Nigeria Diaspora Fund.
The move is expected to among other things, improve FX liquidity in the system as well as strengthen the Naira exchange rate.
The Minister of Industry, Trade and Investment, Dr. Doris Uzoka-Anite, in a notice shared on her X handle (formerly Twitter), yesterday, revealed that the Nigeria Diaspora Fund Multi-sectoral Investment Initiative would be designed and managed by fund managers selected through an Expression of Interest (EOI) exercise where winners are expected to emerge. Owing to this, the ministry has issued an EOI Expression to fund managers for the development and establishment of a multisectoral, multilateral private sector-led investment fund to form the $10 billion Nigeria Diaspora Fund.
The Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun, recently said Nigerians living in diaspora remained a key source of foreign capital projection, adding that a diaspora bond would be launched by June.
This emerged just as the Naira appreciated to N1,380/$1 on the parallel market yesterday, posting a gain of N70 in one single day, compared to Thursday’s close of N1,450/$1.
On the other hand, the the local currency weakened to N1,339.23/$1 on the Nigerian Autonomous Foreign Exchange (NAFEM) window, representing a N29.42 decline, compared to the N1,309.81/$1 it closed at on Wednesday.
However, daily turnover on the NAFEM declined by 2.85 per cent to $309.01 million compared to $318.08 million the previous day. The highest spot rate stood at N1,410, with the lowest recorded at N1,051.
Meanwhile, Uzoka-Anite, explained that the 10-year fund, which would be extendable by two years, offers an expected investment period of three to five years with follow-on investments thereafter.
The minister explained that the proposed fund would be managed by fund managers that satisfy the criteria set out in the EOI, adding that the latter would propose fund structures that will focus on various sectors and stages of investments.
She said subject to the preferences indicated by the managers, the fund would contain multiple investment platforms designed to offer investors different mechanisms for participating in the country’s economic transformation.
Uzoka-Anite further clarified that the fund was intended to encourage remittances, attract investments and facilitate philanthropic endeavours aimed at supporting various sectors including infrastructure, healthcare, education and entrepreneurship in the country.
She noted that the intervention remained part of broader efforts to strengthen ties between Nigeria and its diaspora, promote national development, and harness the potential of The Diaspora Community as agents of change and development for Nigeria.
The minister also pointed out that the national launch of the fund would serve as an opportunity to raise interest in and awareness of the fund towards mobilising capital investment from the diaspora community.
Among several other requirements, the tender stated that greenfield funds may apply provided the promoters demonstrate a deep experience in fund management, investment execution, multilateral development, and a detailed understanding of the Nigerian environment.
Foreign firms are also encouraged to participate, preferably by partnering with reputable local fund managers that meet any or all the requirements.
However, interested foreign firms must be able to demonstrate an ability for frontier and emerging market investment experience.
