Nigeria is set to receive a $1.05 billion oil-for-cash loan from Afreximbank by the end of May to bolster the economy and address foreign exchange market challenges.
The loan, part of a $3.3 billion pre-export finance facility arranged by Afreximbank in January 2024, involves Nigeria committing 164.25 million barrels of crude oil for repayment.
This arrangement, facilitated by the Nigerian National Petroleum Company (NNPC) Ltd, operates through Project Gazelle Funding Ltd, an SPV incorporated in the Bahamas. NNPC has already received an initial disbursement of $2.25 billion out of the agreed $3 billion under the crude oil prepayment facility.
Mr. Denys Denya, a senior executive at Afreximbank, announced on Monday, April 8, that the loan would be finalised in the coming month. The loan, backed by future oil production, involves participation from commercial banks and oil traders, with most already securing internal approvals. With an interest rate of 11.85 percent per annum, the loan aims to alleviate Nigeria’s foreign exchange shortage and stabilise its financial system.
Additionally, Afreximbank is finalising a $200 million funding plan to support the East African crude oil pipeline, despite facing criticism from climate activists.
The East African crude oil pipeline, estimated at $5 billion, has drawn criticism from climate activists, yet Mr. Denya emphasised its importance for improving intra-regional trade.
He noted that the project aligns with Afreximbank’s mandate and plans to increase loans and advances by up to $40 billion by year-end. Despite objections, he affirmed Afreximbank’s support for the pipeline, underscoring its potential to enhance regional trade dynamics.
