The Nigerian government has announced that the final installment of a $3.3 billion loan from the African Export-Import Bank (Afrexim Bank) will be received by the end of May this year. This final disbursement is said to amount to $1.05 billion. According to government officials, it will inject fresh life into the Nigerian economy and bolster the availability of foreign currency within the domestic exchange market.
Nigeria’s economy has faced difficulties in recent times, especially since the removal of the controversial oil subsidy, an event that has led to inflation and a general increase in the cost of living in Africa’s most populous country.
The Afrexim Bank’s Senior Executive Vice President for Finance, Administration, and Banking, Denys Denya, confirmed the completion of oil reserve verification. The oil reserve verification paves the way for releasing the remaining funds next month. “With the confirmed crude oil availability, we expect to finalize the transfer of the remaining balance next month,” Denya said, highlighting the “get the money now, pay later based on future production” structure of the deal.
This disbursement represents the final tranche of a $3.3 billion prepayment scheme established by Afrexim Bank. The Nigerian National Petroleum Company Limited (NNPCL) will utilize future crude oil shipments to settle the loan.
The loan comes after the Nigerian government, through the NNPC, secured the $3.3 billion facility from Afrexim Bank in August 2023. This move followed the removal of fuel subsidies and the unification of the foreign exchange market, which caused a depreciation of the Nigerian naira. The loan served as a much-needed solution to address the country’s foreign exchange challenges by boosting liquidity in the market.
Earlier statements from the NNPC clarified that the loan would strengthen the nation’s foreign exchange reserves and offer an immediate solution to the foreign exchange issues. Several reports in December 2023 confirmed that Nigeria had received the first tranche of $2.25 billion, with the remaining amount slated for disbursement at a later date.
The Nigerian government has also emphasized that the loan agreement, with an oil price benchmark of $65 per barrel, will have a minimal impact on future government earnings from oil sales. The NNPC has maintained that the loan structure won’t significantly affect their future oil revenue streams.
