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Nigeria’s Lagos May Sell More Bonds, Governor Says

May 28 (Bloomberg) -- Nigeria’s Lagos state, where the country’s economic capital is located, may consider selling more bonds as “appetite” for them develops, state Governor Babatunde Fashola said.

“Every time we approached the market, the regulators have benchmarked what we should raise,” Fashola said in an interview in Lagos yesterday. “Those benchmarks have probably underestimated the appetite of the market, because the first two issues were overly successful, oversubscribed.”

Lagos state and its city first issued debt in 2008, when it sold 50 billion naira ($329.7 million) of five-year securities. It concluded another 50 billion-naira, seven-year bond sale on April 19. The five-year securities pay a rate of 13 percent, while the bonds sold two months ago bay between 13 and 14.5 percent.

The bonds are part of a 275 billion-naira program to fund road upgrades and other development projects in Lagos. Fashola wants to revamp the infrastructure of Lagos, which the World Bank says is one of the world’s fastest-growing cities with at least 17 million people. There are plans to build a new urban rail system, construct the Lekki Free Trade Zone, new city bridges and expand the highway to neighboring Benin, Fashola’s office said in a statement on March 24.


The city is home to the West African nation’s biggest companies, including Nigeria Breweries Plc, the largest by market value on the nation’s exchange, and Dangote Group, founded by Nigerian billionaire Aliko Dangote. Chevron Corp., Royal Dutch Shell Plc and Exxon Mobil Corp. all have offices in Lagos.

“We’ll go back to the market and try to raise another series of bonds, denominating them as we have done and showing what we’re doing with them which people can see,” Fashola said, without providing a date for the sale.

The issue will “definitely” be this year, Bolaji Balogun, chief executive officer of Chapel Hill Denham Group, a Lagos-based company advising on the sale, said on April 21.

Nigeria, Africa’s top oil producer, depends on crude exports for more than 80 percent of government revenue. Lagos receives 76 percent of its revenue from taxes, according to the Finance Ministry. The state assigns 15 percent of tax revenue to a debt service account from which bondholders will be paid.

Under unelected military rulers who dominated power over three decades from the mid-1960s and managed Nigeria’s oil boom “as easy money,” the illusion was created “that people didn’t need to pay taxes,” Fashola, 47, said. The success of Lagos in getting people to pay taxes has shown it is “a myth.”

By rebuilding the city’s roads, adding a rail network and creating efficient transportation, it will be easier to deal with the problems created by the city’s large population, making it safer for people and investment, the governor said.

“Some of the perceptions of Lagos as a difficult, chaotic city are rooted in lack of infrastructure,” said Fashola.

To contact the reporter on this story: Dulue Mbachu in Lagos at

To contact the editor responsible for this story: Antony Sguazzin in Johannesburg at

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