GENERAL LOAN AND STOCK ACT
Act · Governance
An Act provides a framework for state governments to raise loans through bond issuance and for the Federal Government to guarantee them. It targets state governments, investors, and the Debt Management Office. This enables financing for sub-national development projects.
GENERAL LOAN AND STOCK ACT
What Is This Policy?
An Act providing a general statutory framework for state governments to raise loans through the issuance of stock (bonds) and for the Federal Government to issue stock on behalf of or to states.
Who Does It Target?
State governments raising domestic debt The Federal Government as guarantor Investors in state government bonds Debt Management Office
What Does It Aim to Achieve?
Provide state governments with a legal basis for accessing domestic capital markets through bond issuance, enabling infrastructure financing at the sub-national level.
Key Features
State Borrowing: Authorises state governments to issue registered stock (bonds) for approved development purposes. Federal Guarantee: Federal Government may guarantee state bond issuances under prescribed conditions. Investor Protections: Provides legal protections for bond investors including priority of repayment. Registry: Maintains a registry of state government stock issuances.
Current Status
Rollout Stage: Active Coverage: State government domestic capital market borrowing Beneficiaries: State governments; infrastructure financing Funding: Bond proceeds
How to Access
Investors: purchase state government bonds through banks and stockbrokers States: issue bonds through DMO-registered processes Federally guaranteed bonds: additional Federal Government approval required Application method: State bond investments: through stockbrokers registered with SEC.
Important Terms
State bonds are not as liquid as FGN bonds but may offer higher yields Federal guarantee does not eliminate state default risk entirely States must service bond obligations from their own revenue sources
Official Resources
Website: https://www.dmo.gov.ng Contact: Debt Management Office (DMO)
Legal Framework
Enacted under the legislative powers of the National Assembly as the General Loan and Stock Act (Cap G5 LFN 2004). Operates alongside the Debt Management Office (Establishment, etc.) Act, the Fiscal Responsibility Act 2007, the CBN Act 2007, and the External Loans Act. Provides the framework for state government bond issuance and aligns with the Securities and Exchange Commission rules on government securities.