An Evaluation of Government Bonds as Investment Vehicles in Nigeria: A Study of the Federal Government Bond Market
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Background of the Study
Government bonds are debt securities issued by governments to finance public projects and manage national debt. In Nigeria, federal government bonds serve as low-risk investment vehicles, attracting institutional and retail investors seeking stable returns (Adebayo & Ogunleye, 2024).
The Federal Government of Nigeria issues bonds through platforms such as the Debt Management Office (DMO), offering opportunities for portfolio diversification. However, challenges such as inflation, fluctuating interest rates, and liquidity concerns affect their attractiveness (Onyeka, 2023). This study evaluates government bonds as investment vehicles, focusing on their performance and appeal in the Nigerian market.
Statement of the Problem
While government bonds are considered safe investments, factors such as rising inflation, inconsistent monetary policies, and limited investor education hinder their adoption in Nigeria. These challenges reduce their effectiveness as investment vehicles and impact their contribution to national economic development (Chinonso, 2023).
This study examines the role of government bonds in Nigeria’s investment landscape, assessing their benefits, limitations, and performance.
Objectives of the Study
- To evaluate the performance of government bonds as investment vehicles in Nigeria.
- To identify challenges associated with investing in government bonds.
- To recommend strategies for improving the attractiveness of government bonds in Nigeria.
Research Questions
- How do government bonds perform as investment vehicles in Nigeria?
- What challenges are associated with investing in government bonds?
- What strategies can enhance the attractiveness of government bonds in Nigeria?
Research Hypotheses
- Government bonds provide stable returns as investment vehicles in Nigeria.
- Challenges such as inflation reduce the attractiveness of government bonds.
- Strategic policy reforms can enhance the appeal of government bonds in Nigeria.
Scope and Limitations of the Study
The study focuses on the Nigerian Federal Government Bond Market between 2023 and 2025. Limitations include potential bias in investor surveys and the influence of macroeconomic conditions.
Definitions of Terms
- Government Bonds: Debt securities issued by governments to raise funds for public expenditure.
- Investment Vehicles: Financial instruments used for generating returns on investments.
- Debt Management Office (DMO): The agency responsible for managing Nigeria’s public debt.
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