Abuja (Agencies): Nigeria, Africa’s largest crude oil producer, is set to receive a $1 billion loan from the African Export-Import Bank (Afreximbank) as part of a larger crude oil prepayment facility. This initiative is aimed at bolstering foreign exchange reserves and stimulating the economy.
Denys Denya, the Senior Executive Vice President for Finance, Administration, and Banking at Afreximbank, confirmed that the verification of crude availability has been completed. He expects the release of the balance to be finalized in the coming month. “Based on future production, you get the money now,” Denya told Bloomberg.
The funds are part of a larger $3.3 billion crude oil prepayment facility sponsored by the Nigerian National Petroleum Company Limited (NNPCL). Afreximbank made an initial disbursement of $2.25 billion in January, and a second tranche of $1.05 billion was expected to be disbursed subsequently. Nigeria is now set to receive the remaining $1.05 billion in May.
The loan will be repaid using proceeds from the sales of crude by the Nigerian National Petroleum Company. In January, Afreximbank stated, “This landmark financing is the largest syndicated loan ever raised by Nigeria in the International market and one of the largest syndicated debts raised in Africa in recent years”.
Despite missing out on the oil price boom in 2022 due to struggles in boosting its production while oil prices were above $100 per barrel, Nigeria has been grappling for years with a shortage of foreign currency and a lack of economic diversification away from crude oil exports. This loan represents a significant step towards addressing these challenges.