Federal Government of Nigeria Green Bond Series II Investor - PowerPoint PPT Presentation

Federal Government of Nigeria Green Bond Series II Investor Presentation May 2019

Contents Section Page 1. The Nigeria Economy 2 2. Global Green-Bond Initiative – Nigeria in Context 12 3. Recap of FGN’s Debut Green Bond Issuance 24 4. FGN Green Bond Series II Offer Summary 32 5. Key Credit Investment Highlights 39 1

The Nigeria Economy Section 1

Nigeria Macro‐Economic Overview  Largest economy in Africa Nominal GDP 2018 $ 416.16 billion  10 th largest Oil Reserves and 9 th largest Gas Reserves Nominal GDP Per capita (USD’ ) 2018 $2,084.89  Resilient GDP growth – Expected Real GDP growth of 3.01% in 2019 Inflation: April 2019 11.37%  Large consumer class – personal disposable income expected to grow by a CAGR of circa 4% over the Monetary Policy Rate : March 2019 next decade 13.50% Prices moderate as inflation has been on a  Foreign Reserves (USD’) May 23, 2019 downward trend, but with slight uptick to 11.37% in $45.07 billion April 2019 Official Exchange Rate (NGN’: USD’): May 2019  Key policy reforms - including the implementation of 306.90 : 1.00 the Economic Growth and Recovery Plan (“EGRP”), import substitution and improved FX liquidity via the Population (April, 2019) Investors’ and Exporters’ (“I&E”) Window c. 199.61 million Credit Ratings (S&P / Fitch/Moody’s) B(Stable) / B+ (Stable)/B2 (Stable) Source: World Bank, National Bureau of Statistics, Chapel Hill Denham Research 3

Africa’s Largest Economy is Poised to Sustain its Economic Growth Improvement Mature Political System of Ease of Doing Business since 2016 Strong Governance and Increasingly Diversified Transparency Focus Economy (Anti-Corruption Drive) Robust Debt Dynamics and Oil and Gas Developed Domestic Fixed Powerhouse Income Securities Market Strong Public Finance Focus on Infrastructure, Management Reforms ICT Transformation Well-Regulated Banking Promoting Macroeconomic Sector and Price Stability Enhancing Security Nigeria in Context 4

National Economic Recovery and Growth Plan The National Economic Recovery and Growth Plan (“ERGP”) was launched in March 2017, an initiative targeted towards achieving structural economic change and having a more diversified and inclusive economy. Strategic Areas Macroeconomic Economic Diversification Social Inclusion Governance and Competitiveness Policy and Growth Drivers and Jobs other Enablers Objectives Implementation  In line with ERGP’s commitment to stimulate and support the  Fiscal Stimulus and monetary policy economy, 30% of the 2019 Budget was allocated to capital  External Balance of Trade expenditure Restoring growth Restoring growth  Leveraging Science and Technology  The first Federal Government Sukuk was issued in September 2017  Increased Government Spending for the construction and development of roads to further promote infrastructure development, while a Second Sukuk was issued in December 2018.  Social Inclusion  Financing infrastructure through the Presidential Infrastructure Investing in our Investing in our  Job Creation and Youth Empowerment Fund and Road Infrastructure Development and Refurbishment people people  Improved Human Capital Investment Tax Credit Scheme.  The ERGP Focus Labs was launched in March 2018 to mobilize the private sector to develop key investment projects as well as implementation plans that will stimulate job creation.  Investing in infrastructure Building a globally Building a globally  The ERGP Focus Labs expects to source and deploy $22.5 billion  Improving the business environment competitive competitive of private sector investments by 2020 across the agriculture,  Promoting digital-led growth economy economy transportation, manufacturing, solid minerals, gas and power sectors. Source: World Bank, National Bureau of Statistics, Chapel Hill Denham Research 5

Commitment to ERGP is Yielding Results Stabilisation Continues with Improvement in External Reserves ERGP Supporting Diversification of the Economy Gross External Reserves, USD bn 1 50.0 Contribution to GDP : Oil and Non-Oil 45.0 100% 5.30% 6.40% 8.70% 8.60% 10.70% 12.90% 90% 40.0 80% 70% 35.0 60% 94.70% 93.60% 91.30% 91.40% 50% 89.20% 87.10% 40% 30.0 30% 20% 25.0 10% 2013 2014 2015 2016 2017 2018 20.0 Non-Oil Oil 16 Nigeria's GDP Growth 6.22% 15 5.49% 5.31% 14 13 4.21% 12 2.79% 11 1.93% 10 0.82% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Sources: National Bureau of Statistics, CBN, Bloomberg 2018 2019 2011 2012 2013 2014 2015 2016 2017 2018 -1.58% Inflation MPR 6

Nigeria Key Economic Reforms Leading to Positive Outlook GDP Breakdown by Sector (2018) Others 26% Agriculture 26% Real Estate 6% Trade Oil & Gas 16% 7% Telecoms 10% Manufacturing 9% Source: National Bureau of Statistics 7

Nigeria’s Debt Management Strategy Reduce debt service ratio by Ensure sustainable public increasing revenue debt and borrowing on a prudent and least cost basis Lengthen the maturity profile Rebalance debt portfolio in of government debt favour of lower cost longer tenured debt 8

Government Debt Remains Contained Debt remains at Sustainable Levels… …And One of the Lowest Debt Levels among African Peers 2017 Gross Debt / GDP (%) Total Public Debt / GDP (%) 19.09 103.0 18.20 16.40 13.00 12.70 12.70 71.8 64.9 63.1 54.2 53.0 48.3 18.2 2013 2014 2015 2016 2017 2018 Nigeria Angola Egypt Ghana Kenya Senegal South Africa Zambia • Debt Sustainability Analysis conducted annually to reaffirm that Public Debt Stock is sustainable • The Federal Government has continued to diversify its borrowing instruments with the inclusion of Sukuk, Green Bonds, Savings Bonds and Diaspora Bonds • Efforts are on to improve the Debt Service/Revenue Ratio which is an important focus in our Debt Management 9

Achieving an Optimal Debt Structure Good Proportion of Concessional and Non‐concessional Borrowing On Track to Shift Domestic Debt Portfolio to Long Term Maturities % of Total Domestic Federal Government Debt % of Total External Debt - 2018 100% 90% 80% 56.4% 57.6% 61.8% 64.7% 70% 67.4% 78.0% 60% 50% Multilateral 44% 44% 40% Bilateral 30% 43.6% 42.4% 38.2% 35.3% 20% 32.6% Commercial 22.0% 10% 12% 0% 2013 2014 2015 2016 2017 2018 Short term Medium and Long term Nigeria’s Total Public Debt Portfolio As At December 31, 2018 Rebalancing to Optimal External/Domestic Debt Mix % of Total Federal Government Debt Amount Outstanding Amount Outstanding DEBT CATEGORY (USD'Mn) (N'Mn) 100% 90% A. Total External Debt 25,274.37 7,759,229.99 80% 70% 68.5% 68.2% 76.1% FGN Only 21,043.65 6,460,399.86 80.7% 82.9% 83.8% 60% 50% States & FCT 4,230.72 1,298,830.13 40% B. Total Domestic Debt 54,162.35 16,627,841.75 30% 20% 31.5% 31.8% 23.9% 19.3% FGN Only 41,610.44 12,774,405.70 17.1% 16.2% 10% 0% States & FCT 12,551.91 3,853,436.05 2013 2014 2015 2016 2017 2018 C. Total Public Debt (A+B) 79,436.72 24,387,071.74 External Debt Domestic Debt Exchange Rate: N307/USD Sources: Budget Office of the Federation, Debt Management Office,. 10 Fiscal Policy, Reforms and Debt Management

Fiscal Discipline and Ongoing Initiatives to Improve Revenues  Treasury Single Account implementation Prudent Fiscal Policy, with 2018 Budget Deficit Below 3% of GDP  Integrated Payroll Personnel System (IPPIS) Budget Deficit as % of GDP implemented across several MDAs to improve public Efficiencies service productivity and increase government revenue 2013 2014 2015 2016 2017 2018 2019 Budget  Establishment of Efficiency Unit to cut costs and block leakages  Adoption of a 22-point Fiscal Sustainability Plan with the States as one of the measures to tackle the 2015-2016 fiscal (0.99) crisis at the sub-national level following the decline in Financial (1.32) (1.33) revenue Sustainability (1.62) (1.74)  Presidential Initiative on Continuous Audit (2.16)  Tighter performance management framework for SOEs (3.00) • Improving Value Added Tax (VAT) collection (3.35) • 85% allocated to state and local governments Improving Non- Reforms Supporting Increased Revenue Generation • Introduction of a Policy on Tax on select luxury items Oil Revenues ₦ Bn, % of GDP • Increase in Excise Taxes on alcohol and tobacco 20.0% 120.0 • Reforms of pioneer tax incentive regimes 18.0% 14.3% 13.8% 16.0% 100.0  Broaden tax base and improve revenues (Federal and 14.0% 8.8% State Governments) 10.0% 7.4% 80.0 12.0% Improving Tax  Revenue mobilisation initiative aimed at encouraging tax 10.0% Revenues 60.0 payers to regularise tax status through Voluntary Assets 8.0% and Income Declaration Scheme (VAIDS) 40.0 6.0% 69.0 68.5 67.2 67.9 63.2 4.0% 9.0 9.3 6.1 6.8 20.0 5.0 2.0%  This was launched in January 2019 and focuses on Strategic increasing the Government’s Revenue through various 0.0% 0.0 Revenue Growth 2013 2014 2015 2016 2017 initiatives such as increasing Customs Revenue and Initiative GDP Revenue (Oil + Non-Oil) Revenue / GDP Expanding the Taxpayer Database Sources: Ministry of Finance, Budget Office of the Federation, Ministry of Budget and National Planning. 11

Section 2 Global Green-Bond Initiative – Nigeria in Context