Nigeria to get $1bn oil-backed loan from Afreximbank in May

AFRICAN BUSINESS AND ECONOMYApril 28, 2024 at 11:55 AM UTC

TLDR

Nigeria to receive $1.05 billion from syndicated loan by May to boost economy and foreign currency supply.
Loan facilitated by Afreximbank, with majority distributed in January, to be repaid with crude cargoes from Nigeria.
Denys Denya from Afreximbank confirms crude availability for disbursement of remaining balance next month.

Nigeria is on track to receive $1.05 billion from a syndicated loan supported by oil by the end of May, aimed at revitalizing its economy and bolstering the supply of foreign currency in the local foreign exchange market.

This disbursement is part of a $3.3 billion prepayment facility organized by the African Export-Import Bank (Afreximbank), set to be repaid using crude cargoes from Nigeria’s state-owned energy firm, the National Petroleum Co. The majority of this syndicated loan, the largest raised by Africa’s largest oil producer, was distributed in January.

Denys Denya, Afreximbank's senior executive vice president for Finance, Administration, and Banking, confirmed that the bank has confirmed the availability of crude and will release the remaining balance next month.

Key Takeaways

Nigeria, historically Africa’s largest oil exporter, grappled with a foreign exchange shortage, leading to a depreciation of its currency, the naira, against the U.S. dollar earlier this year, although it has since stabilized. President Bola Tinubu inherited an economy burdened by record debt, high unemployment, and significant central bank financing. In addition to the funding from Afreximbank, Nigeria is pursuing up to $2.25 billion in loans from the World Bank, with expectations for approval by the bank’s board in June. Furthermore, the country plans to issue diaspora bonds later this year to attract much-needed foreign exchange into the economy.

Nigeria

Afreximbank

Foreign Exchange

US Dollar

Naira