DMO Opens Two New 2021 FGN Savings Bonds For Subscription.

The nation’s debt office, the Debt Management Office (DMO) has offered for subscription, two new Federal Government of Nigeria’s savings bonds at N1,000 per unit.

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The bond opens today 6th April 2021 and closes on 9th April 9th, 2021 and the DMO says one of the bonds is a 2-year savings bond due on April 14, 2023, at an interest rate of 5.522 per cent per annum, while the other is a 3-year FGN Savings Bond due April 14, 2024, at 6.522 per cent per annum
Each of the saving bonds is opened at N1,000 per unit, with a minimum subscription of N5,000 in multiples of N1,000 thereafter and subject to a maximum of N50 Million.
It also disclosed that the Settlement Date is fixed on April 14, 2021, and the Coupon Payment Dates are July 14, October 14, January 14, and April 14.

“The bonds qualify as securities in which trustees can invest under the Trustee Investment Act. It is backed by the full faith and credit of the Federal Government of Nigeria and charged upon the general assets of Nigeria,’’ DMO explained.

The DMO urged interested investors to contact the stock-broking firms appointed as distribution agents by the DMO.

The Debt Management Office (DMO) had also on March 18th 2021 listed its third Sovereign Sukuk “N162.557 Billion 7- year 11.20 percent Al Ijarah Sovereign Sukuk that is due 2027” on The Nigerian Stock Exchange and the FMDQ Securities Exchange.

The Sukuk which at the time of issuance was massively subscribed to the tune of N669.124 Billion or 446 percent, was issued to finance 44 economic road projects across the six (6)-geopolitical zones. With the listing, investors who are already holding the SUKUK can trade them while new investors have an opportunity to buy the SUKUK in the secondary market.


Savings interest

Here are banks that pay higher interest for your savings

Some Nigerian banks are paying higher interest to customers for saving their money with them, while others pay lower than regulatory approved minimum rate of 1.15 percent.

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The Central Bank of Nigeria (CBN) on August 31, 2020, slashed the minimum interest payable on savings deposited in banks across the country to 10 percent per annum of the Monetary Policy Rate (MPR).

The MPR is currently at 11.5 percent. What this means is that the banks are to pay average interest rate of 1.15 percent (10 percent of 11.5 percent) to their customers for saving with them.

The CBN on September 22, 2020, cut its benchmark interest rate by 100 basis points (bps) from 12.5 percent to 11.5 percent.

Some of tier two and three banks are paying higher interest rate on savings account, a development analysts describe as a way of attracting customer deposits.

Out of 21 deposit money banks that published their rates as at March 5, 2021, Heritage Bank pays higher interest rate on savings at an average of 4.2 percent.

It is followed by Suntrust Bank 4.1 percent, Unity Bank 1.9 percent, Ecobank 1.25 percent, Citibank and Standard Chartered Bank 1.2 percent each.

The bank with the lowest interest payment on savings account is Providus Bank Limited. It pays average rate of N0.62 percent followed by Unity Bank plc, which pays N1.07 percent to their customers.

Other banks that pay N1.15 percent interest rate on savings include FCMB, Fidelity Bank, GTBank, Globus Bank, Keystone Bank, Polaris Bank, Stanbic IBTC, Sterling Bank, Titan Trust Bank, UBA, Wema Bank, and Zenith Bank.

Customers’ reaction

Christian Ezegolo, a Nigerian businessman, does not operate a savings account because he needs money to invest in his business and could not accept what he described as peanut that banks pay as interest on deposit.

“To me as an entrepreneur, I don’t save because I need that money to run my business. It does not make economic sense to me that I will go and give bank money and it is paying me 1.1 percent and I will still go to another bank and borrow at 25 percent, it does not make sense,” he says on phone.

What analysts say

Ayodeji Ebo, head, retail investment, Chapel Hill Denham, says banks are not supposed to pay lower than the regulatory prescribed interest rate, noting customers have the option of going to a bank that can compensate them better on their savings.