Debt Management Office (Nigeria)

The Debt Management Office (DMO) is a government agency established on 4 October 2000, tasked with centralizing the management of Nigeria's debt. It was created in response to challenges in Nigeria's debt portfolio, which included high external and domestic debt, substantial debt service, low external reserves, and weak debt management capacity.

History
The DMO was established following recommendations from the Debt Management Department (DMD) of the International Monetary Fund (IMF) after a comprehensive assessment of Nigeria's debt situation in 1999. The DMD suggested the establishment of a single agency responsible for all aspects of public debt management, including policy formulation, strategy development, borrowing, recording, servicing, and reporting.

Initially an autonomous unit within the Presidency, the DMO was later transferred to the Ministry of Finance in 2001 and upgraded to a full parastatal in 2003. The legal framework for the DMO's operation includes the Fiscal Responsibility Act 2007 and the DMO Establishment Act 2003.

Functions
The primary functions of the DMO are to advise the Federal Government on public debt management, raise funds through domestic and external sources, maintain an accurate database of public debts, service all public debts, manage associated risks, develop debt management strategies, promote the domestic debt market, and collaborate with relevant stakeholders on public debt management issues.

Organization
The DMO is led by a Director-General, appointed by the President for a term of five years, with a possibility of a renewal for another five years. Three Executive Directors oversee the operational departments of the DMO: Market Development, Portfolio Management, and Policy Strategy and Risk Management. Additionally, there are four service departments: General Services, Internal Audit, Legal Services, and Public Affairs. The DMO operates through six zonal offices situated in different regions to coordinate debt management at state and local government levels.

Achievements
The DMO achieved significant milestones by reducing Nigeria's external debt stock, increasing external reserves, improving credit ratings, issuing internationally successful bonds (Eurobonds, Sukuk bonds, and Green Bonds),  and strengthening debt management strategies. It enhanced the capacity of public debt managers, provided education on public debt management, and maintained regular reports for public awareness.

Challenges
The DMO faces challenges related to managing the rising public debt stock, high domestic debt service costs, the decline in the share of external debt, the need for coordination and harmonization in debt management, improvements in the legal and institutional frameworks, and ensuring transparency and accountability.