Johnston said this in an interview with newsmen on the sidelines of the Banking Outlook Africa conference 2010 in Johannesburg. She stated that Nigeria, with US$10 billion annual remittances, was well positioned to develop Diaspora bonds to stimulate its economy.
"Diaspora bonds are a mechanism whereby developing countries can borrow from their diaspora community abroad to raise financing," she said. She noted that official aid alone was not adequate to bridge the financing gaps in developing countries
Johnston said that Nigeria was one of the highest receivers of remittances in sub-Saharan Africa and should use this for economic development.
It is being done in Ethiopia and Rwanda at the moment and not many other countries are utilizing it around the world, but it could be an interesting thing for the Nigerian market," Johnston said. Shedding more light on the bonds, she said it was developed when the community of the Diaspora abroad provides money as a source of funds or capital that could be used to help in the financing gaps.
"In other words, we are using the Diaspora abroad who have their natural links to their home country of Nigeria, to bridge financing gaps. When you take debt to export ratio and this is a key measure in terms of sovereignty ratings, and factor into that, the foreign exchange that is derived from the remittance business, you can see a decrease of debt to export ratio," she said. Johnston said similar effect would occur when remittances were factored into current account deficit placing the nation in better stead.
She said Nigerian banks have the potential to become number one in the continent in the future. She explained that remittance business is very large in Africa, with funds coming mainly from the USA, and Canada which account for "at least 50-60 per cent of remittances into Anglophone Africa" .Johnston said other countries from where huge remittances come are the UK, Germany, Italy and Spain. Globally, she said the remittance business was worth about US$330 billion.