Portfolio Management (PMD)

Overview

The Portfolio Management Department (PMD) is part of DMO’s Front Office. The other two Departments considered part of Front Office include Market Development Department (MDD) and Strategic Programmes Department (SPD). The PMD is responsible for executing transactions in financial markets, including the management of auctions and other forms of borrowing. It is responsible for external debt negotiations, other forms of negotiations, and all other funding operations. Its staff members are responsible for implementing short-term strategies related to bond issuances in domestic money and capital markets.

The functions of the department relates to the mobilization of financial resources to meet public sector needs, especially its declared fiscal deficit. It uses varying sources of funds, domestic or external, to negotiate and contract new borrowing for the nation. In the course of performing these functions, the department ensures that established rules and approved guidelines and policies are strictly followed, and that operations are kept within bounds. To achieve this, it shall work with the Monitoring, Evaluation and Special Duties Unit of the D-G’s Office to ensure that such rules and guidelines are complied with. Its activities are also inter-linked with those of Market Development Department, Debt Recording and Settlement Department, and the Strategic Programmes Department.

Departmental Structure and Activities

The Portfolio Management Department is headed by a Head of Department, who is a Director. He is supported by three Team Leaders charged with the key role of overseeing the activities of the three Units. The following is a general description of the units and sections of the department:

• Loans and Other Financing Products Unit (LFP):

  This unit is responsible for leading External Debt Negotiations, drafting and vetting Loan Agreements and terms of Government Guarantees, Processing Guarantees, Processing Public Private Partnership (PPP) projects, review of financial implications of various projects (includes Cost Benefit Analysis of projects, Cash Flow Analysis, etc.); Reviewing States’ request for borrowing and Structuring of other Financing Products. The LFP unit is headed by a Team Leader.

• Contingent Liability & Risk Asset Management (CL&RAM) Unit: This unit is responsible for the management of the DMO’s risk assets creation activities with particular reference to on-lent facilities to Ministries, Departments and Agencies (MDAs). The unit is also responsible for effectively and efficiently managing contingent liabilities arising from Sovereign Guarantees, in line with the approved Framework for the management of Government contingent liabilities. Other responsibilities include developing and implementing mechanisms for Special Government Financing (SGF) and the management of loans granted to other countries by the FGN. The CL& RAM Unit is headed by a Team Leader.

• Securities Issuance Unit (SIU): This unit is responsible for Issuances of Federal Government Debt Securities and other related activities towards achieving low cost and tolerable risk limits for FG domestic borrowing. Some of the specific tasks include the development of the FGN Securities Issuance Programme, Conducting FGN Bond Auctions and all Post allotment activities, as well as developing analytical framework for the domestic debt borrowing. The SI Unit is headed by a Team Leader.

The SIU disseminates timely information to all stakeholders regularly on the DMO’s website through the following publications:

Market Development (MDD)

Overview

The Market Development Department (MDD) or Department was created in January 2008. Prior to this time, the Department was a Unit in the Portfolio Management Department. The Department was created based on the need to give a sharper focus to the development of the sovereign bond market in particular and the domestic bond market at large. MDD’s primary responsibility is to build on the successes achieved by the DMO in the Primary and Secondary Markets with the ultimate objective of building “a first-rate and internationally competitive bond market”. Following the DMO’s broader strategic intent, the role of the Department is now anchored on two pillars which are: “To develop innovative approaches for optimally accessing domestic finance “ and “To deepen and broaden the FGN Securities Market in order to sustain the development of other segments of the Bond Market and support Government’s financing needs’’.

FUNCTIONS OF MARKET DEVELOPMENT DEPARTMENT

To achieve the above Objectives, the MDD is charged with the following responsibilities:

Deepening the Investor Base

A large and diversified investor base is required to support a growing bond market. The Department is charged with increasing and diversifying the investor base for FGN Bonds in particular, and also sub-national and corporate bonds in general through various means, including public enlightenment programmes.

Development of New Products

Development of new products, such as Inflation-Linked Bonds, Zero Coupon Bond, bonds with Options and Non-Interest Bearing Securities, which are required to attract new investors and meet the various investment preferences or objectives of different investor groups. The issuance of securities in the International Capital Market such as Eurobonds, Global Depository Notes and Diaspora Bond are some other product development initiatives.

Monitoring and Regulation of the Sovereign Bond Market

The Department is responsible for the supervision of Primary Dealer Market Makers in line with the DMOs “General Rules and Regulations Governing the Primary Dealer Market Maker (PDMM) System in Federal Government of Nigeria (FGN) Securities” as amended from time to time. MDD is also charged with issuing the Operational Guidelines governing the operations of the sovereign bond market. The Department is responsible for securing endorsements (such as inclusion in International Indices) and concessions that would support the development of the domestic FGN Securities market.

Support the Development of the Sub-national and Corporate Segments of the Domestic Bond Market

The Department is actively involved in initiatives, policies and activities targeted at encouraging the growth of the Corporate and Sub-national segments of the bond market in recognition of the developmental role of the DMO. In this regard, the Department actively engage local and international stakeholders to ensure vibrant FGN securities markets. MDD serves as the Secretariat for the Bond Market Steering Committee (BMSC) and the Monetary and Fiscal Policy Co-ordinating Committee (MFPCC) and is a member of the Capital Market Committee of the Securities and Exchange Commission. This is in recognition of the need for the harmonisation of fiscal, and monetary policies with government’s debt strategy, in order to achieve stability in the financial markets (particularly the fixed income securities segment). The Department also represents the DMO in other standing and adhoc committees charged with similar objectives.

DEPARTMENTAL STRUCTURE

The Market Development Department is made up of two Units. These are Market Research and Intelligence and Product Development Unit (MRI&PDU) and Market Planning, Regulation and Supervision Unit (MPRSU).

Market Research Intelligence and Product Development Unit (MRI&PDU) 

The Unit focuses on three job functions:

• Research and Intelligence on the domestic and external securities markets;
• Product Development; and,
• Stakeholder engagement on Government Policies.

The first relates to collecting data and information on the financial markets (money, equity, bonds and foreign exchange), as well as, other macroeconomic indicators and analyzing them to guide the DMOs operations in the domestic and external securities markets.

The Unit is responsible for the preparation of Frameworks for the introduction of new products into the domestic and external securities markets on behalf of the DMO. The unit is also responsible for securing the required approvals and implementing the initiatives.

The Unit is the focal point for articulating and following through on policies and legislations (including changes thereto) required for deepening the market for FGN s ecurities, corporate and sub-national bonds. In this regard, the Unit has regular interactions with all relevant stakeholders.

Market Planning, Regulation and Supervision Unit (MPRSU)

The Unit’s responsibilities include:

1. Collaborations with other market stakeholders on issues that impact on the domestic bond markets, with emphasis on diversifying the domestic bond market in terms of products and investors.
2. Monitoring and supervision of the DMO’s Primary Dealer Market Makers and Government Stockbroker.
3. Monitoring trends in the domestic bond market and supporting market initiatives with a view to achieving stability, active trading in FGN Securities and the adoption of international best practices in market infrastructure.
4. Organizing activities of the Monetary and Fiscal Policy Coordinating Committee.
5. Coordinating activities relating to sovereign Issuances in the International Capital Market.
6. Managing investor relations as well as keeping records of investor participation in FGN Securities.

Strategic Programmes (SPD)

Overview 

From the strategic position to use debt management to proactively leverage development effectiveness for Nigeria, the Strategic Programmes Department (SPD) was created in July 2007 to coordinate the series of activities that would culminate in the enthroning of sound debt management practices at the sub-national level, ensuring an enduring system of fiscal prudence and debt sustainability.

SPD’s Key Responsibility

The development of capacity and competence for effective public debt management at the sub-national level, through the provision of support for the operation of Debt Management Departments in the States.

Departmental Structure

The Department has two Units; spilt into three as follows: Institutions and Skills Development Units (ISD) (Southern and Northern Zones) and the Debt Management Training (DMT) Unit.

Institutions and Skills Development Unit: The split of ISD in the southern and northern zones is for effective coordination of the DMO’s sub-national debt management initiatives in all 36 States of the Federation and the Federal Capital Territory (FCT). ISD U core functions include: Facilitating the development of Debt Management Institutions and Capacities at the Sub-National level; Strengthening debt management capacities in all 36 States of the Federation and the FCT through the provision of support and assistance to ensure prompt submission of reliable and accurate domestic debt data to the DMO; Maintenance of comprehensive and reliable Sub-National domestic debt data of the 36 States and the FCT for periodic publication by the DMO; and, Sustaining advocacy programmes for increased stakeholder engagement in the development of sub-national debt management capacities

Debt Management Training Unit:   DMTU core functions include: Initiating, planning and coordination of SPD capacity building programmes; Marketing of DMO services to identified target markets both locally and internationally; Coordinating the activities of Donor partners in the area of sub-national debt management; Establishing robust relationships with other DMOs, Institutions and Associations across the world, with a view to sharing information, knowledge and best practices in Public Debt Management; and, Coordination of DMO in-house capacity building sessions such as the Monthly Seminar Series, as well as, organizing retreats, attachment programmes and study tours for States’ officials, institution, students and Debt Management Officers from other African countries.

Policy, Strategy & Risk Management (PSRMD)

Overview

The Policy, Strategy and Risk Management Department (PSRMD), which is also referred to as the Middle Office, is responsible for the development of the medium-and long-term debt strategies aimed at maintaining the costs of government borrowing at its barest minimum and within prudent level of risks. Other activities of the department include the following:

• Designing and formulating public debt management policies and strategies;
• Conducting Debt Sustainability Analysis (DSA) on an annual basis, on the nation’s debt portfolio;
• Tracking macroeconomic issues and their impact on the activities of the DMO;
• Establishing strong working relationships with other governmental entities with the responsibilities for formulating macroeconomic policies, planning, public investment, cash management, budgeting, monetary policies and balance of payments;
• Conducting periodic analysis on the total public debt stock (domestic and external) and debt flows in specific periods, provide information on the indebtedness to each creditor, while evaluating the nation’s debt composition for each creditor on currency, maturity, and interest-rate basis;
• Conducting debt portfolio risk analysis and reports on portfolio-related risks;
• Undertaking research on macroeconomic issues that have bearing on public debt management; and, Conducting periodic assessment on the operations of all departments by ensuring compliance with DMO’s strategies and benchmarks.

Departmental Structure

The department is made up of three (3) units, namely:

Policy & Strategy (P&S) Unit: The Unit designs and formulates Public Debt Management Policies and Strategies and conducts Debt Sustainability Analysis (DSA) of the country’s debt stock, and Medium-Term Debt Management Strategy (MTDS). It also undertakes periodic review of the debt portfolio to ensure compliance with debt policy and strategy and tracks the impact of macroeconomic developments on the Office’s debt management operations.

Statistics, Analysis & Risk Management (SA & RM) Unit: The Unit is responsible for publishing periodic statistical bulletins, analysis of macroeconomic issues and assessing their impact on the sovereign debt portfolio, Production of DMO Quarterly Review Reports and Annual Reports, conducting quarterly risk analysis on debt portfolio, DMO’s website update and management reports on public debt, and conducting research on areas of relevance to public debt management operations.

Task Compliance & Operational Risk Management (TC & ORM) Unit: Task Compliance & Operational Risk Management (TC & ORM) Unit: The Unit is responsible for ensuring DMO’s compliance with agreed job targets through the periodic monitoring, assessment and reporting on planned tasks and activities, the management of Operational Risks, as well as, tracking DMO’s compliance with the World Bank’s Debt Management Performance Assessment (DeMPA) Tool.

Debt Recording & Settlement (DRSD)

Overview and Functions

The Debt Recording and Settlement Department performs two core functions, which allow all other operational functions in the DMO to be carried out and these are:

• To maintain the debt database and provide information that supports the reporting and analytical work of the organisation; and
• To forecast, process and effect the servicing of debt.

The major strategic objective of the department is to create and maintain a comprehensive, reliable and efficient national and sub-national debt database, and to ensure prompt and accurate settlement of debt service obligations. Therefore, the functions comprise the administration of the full cycle of the life of a contract/instrument, from signature to full repayment. 

The department is responsible for:

Registering, managing, paying and accounting of both foreign debts and securitised domestic debt;

• Registering and tracking data in such special accounts as cross-enterprise debts, contractor/supplier arrears as verified and advised by the Budget Office of the Federation, grants, private non-guaranteed debts; on-lending agreements, Sub-national domestic debts and those of their agencies;
• Maintaining records of all debt contracts, disbursements, debt restructuring and issued guarantees;
• Organizing the provision of debt information and statistics to meet the demand of other departments and external stakeholders, while ensuring accuracy and timely response to such needs;
• Conducting data validation;
• Handling the settlements of transactions, their confirmation, and the maintenance of their related financial records; and,
• Forecasting and planning debt service and debt repayment, including provisions for contingent liabilities.

The department uses the CS-DRMS (Commonwealth Secretariat Debt Recording & Management System) 2000+ Version 1.3 for public debt recording in order to attain efficiency and effectiveness in the activities of the department. This software is supported by internal controls and regular data validation to avoid discrepancies in loan transactions and to ensure a reliable database. 

Departmental Structure

The department centralizes all the operations related to the registration of loans, the recording, monitoring and control of disbursements/subscriptions, the execution and management of public debt service operations, and the production of debt data. It is composed of a Director, Team Leaders for each unit and supporting officers of varying rank. The department is divided along functional lines into two sections: the Debt Recording Section and the Debt Settlement Section.  The Debt Recording Section performs the debt recording and reporting function, while the Debt Settlement Section performs the payment and settlement function. Each section is divided into specialist units that perform the following functions:

1.  DEBT RECORDING SECTION

A.    External Debt and Special Accounts Unit (ED & SAU)

The ED & SAU is primarily responsible for recording of loan details, inputting the borrowing terms, and recording the actual transactions related to external debt contracted by the Federal Government of Nigeria. Its core functions are to extract comprehensive data on external obligations from loan agreements and record and monitor them in the CS-DRMS. The unit also records and manages Private Sector External Debts, Grants, Contingent Liabilities and all other “Special” debt instruments. It is also responsible for maintaining the integrity of the external debt and special accounts database, ensuring that data is up-to date, and for generating reports for end-users.  

B.    Sub-National Debt Unit ( SNDU)

The SNDU is primarily responsible for maintaining an accurate, comprehensive, and up-to-date database on loans borne by the state governments. It is responsible for liaising with state authorities to ensure that loan details, terms, and actual transactions are accurately captured and reported in the main debt data system, CS-DRMS.

C.    Domestic Debt Unit

The DDU is primarily responsible for maintaining an accurate, comprehensive, and up-to-date securitized domestic debt database. It captures information on auctions of FGN Bonds and Treasury Bills issued by the Federal Government of Nigeria and records them in the CS-DRMS. It is also responsible for generating key domestic debt reports for internal and external stakeholders. 

2.  DEBT SETTLEMENT SECTION

A.    Debt Settlement Unit (DSU)

The DSU is primarily responsible for forecasting future debt payments and processing actual debt service obligations. The unit also monitors and ensures that all approved obligations of the Federal Government of Nigeria have been paid in full, as and when they fall due. Among its core functions are the preparation of the annual debt service estimates for incorporation into the Federal Budget, and the reviewing and processing of creditors bills (domestic and external). It follows up on the externalisation of approved payments, reconciling debt payments that are effected together with other key agencies, namely the Central Bank of Nigeria and the Office of the Accountant General of the Federation, and monitoring the redemption of FGN Bonds and other government securities.

Organisational Resourcing (ORD)

Overview

This department provides corporate services supportive of the activities of the DMO and is the custodian of its corporate values. The Organizational Resourcing Department is a medium through which the Board executes its resourcing function, which ensures the provision of specialized staff and providing them with the necessary training and tools. This makes for attracting and retaining qualified staff members by recommending a fitting salary scale and career opportunities, as well as recommending relevant training and avoiding high staff turnover. It also provides the platform for the provision of adequate office space and working tools. The organizational Resourcing Department is made up of the following units each of which is headed by a Team Leader.

DEPARTMENTAL STRUCTURE 

Human Resource Unit: responsible for attracting and retaining competent staff for the DMO. Its general HR functions include proposing staff regulations for the approval of the board and implementing on obtaining its consent. These regulations require the approval of the Minister of Finance to be effective but need not to be gazetted. Its areas of operation include the following: 

1. Employee compensation and reward;
2. Staff training and management development;
3. Staff evaluation and promotion;
4. Recruitment, selection and placement;
5. Discipline and grievance procedures; 

Finance & Accounts Unit: responsible for managing the Fund of the DMO as established by Part V (Financial Provisions), Sections 14 – 18 of the Debt Management Office (Establishment) Act of 2003 and of the keeping the financial records of the DMO in keeping with an established Accounting System to be approved by the Board. Its major functions will include the following: 

 (i)  Payroll/Expenditure Accounting: to process all payment vouchers for regular activities of the DMO, including staff salaries, allowances, employee emoluments and perquisites (including pension and gratuity), daily operational expenses, and asset procurement;

(ii) Project Accounting: to process, classify, and record major public debt related transactions such as accounting for the revenues and costs of debt conversion and domestic debt issuances;

(iii) Budget & Management Accounting: to prepare the annual budget of the Office for submission to the Minister of Finance; and ensure compliance with the budget of the DMO and to undertake variance analysis to determine the cause and effect of non-compliance. The responsibility of this section will also include the preparation of management accounts of the organization at predetermined intervals, e.g. quarterly, to enable management have a sense of its performance to the date of reporting and to prepare ground for continuous audit;

(iv) Final Accounts: to keep record of DMO’s assets and liabilities, including revenues, and to harmonize its revenues with its expenditure to determine its global state of affairs to be reported in formal, statutory financial statements. This section will be responsible for the submission of statutory reports to the OAGF and will liaise with the Audit and Compliance Unit in the DG’s office to ensure compliance with established internal controls and checks.

Admin Unit: Its general Administration functions include the following:

1. Facilities management;

2. Protocol and passage;

3. General administrative duties include management of pool services such as the administration of Office Assistants, dispatch riders, etc;

(4) Publicity & Media Relations: to create and preserve a good image for the DMO by being both proactive and reactive in dealing with press issues management and the management of public functions. The Admin unit is responsible for managing the external communications strategy of the DMO. In addition to creating and preserving a pleasant and favorable image for the DMO, this unit will also spearhead relationships building between the DMO and its clients and other stakeholders working in tandem with the operational departments.