Nigeria Receives US$2.25 Billion Loan from Afrexim, with UBA as Key Local Arranger
In a significant development for Nigeria’s financial landscape, the African Export-Import Bank (Afrexim Bank) has facilitated the disbursement of a substantial US$2.25 billion loan to Nigeria, marking the first tranche of a larger US$3.3 billion facility. This pivotal agreement, with the United Bank for Africa (UBA) serving as the local arranger, represents a landmark collaboration between key players in the financial sector.
UBA, a prominent member of the FUGAZ group, has been designated as the mandated local arranger for this substantial liquidity support facility, underscoring its role as a key player in Nigeria’s financial ecosystem. Afrexim Bank, as the mandated
lead arranger for the structured finance facility has played a critical role in facilitating this significant financial endeavor.
The transaction, officially signed on December 29, 2023, represents a milestone in the financial cooperation between the involved entities, who have also recently signed a $150 million deal. This strategic financial arrangement sees Afrexim Bank and UBA working in close coordination, with NNPC Limited acting as the principal financier and other key participants, including Guvnor and Sahara Energy, contributing to the collaborative effort.
The total transaction value of US$3.3 billion is aimed at providing liquidity support to help alleviate Nigeria’s foreign exchange challenges. The first tranche of US$2.25 billion, to be deposited into a designated account at the Central Bank, is expected to ease forex liquidity pressures. UBA’s role as the local arranger and the onshore depository bank, in conjunction with Afrexim Bank’s position as the mandated lead arranger, highlights the comprehensive nature of this financial arrangement.
NNPC’s facilitation of the financing, with support from major oil trading firms such as Sahara Energy, Vitol, Oando, and Guvnor, further underscores the collaborative and multi-stakeholder nature of this transaction. Additionally, the commitment of UBA, Sahara Energy, Vitol, Oando, and Guvnor, each contributing $100 million to the facility, demonstrates the collective effort to address Nigeria’s financial challenges.
Looking ahead, the remaining balance of the facility, amounting to US$1.05 billion, is scheduled to be disbursed in January 2024, further solidifying the commitment to providing vital liquidity support to Nigeria’s economy. Furthermore, other developments aimed at liquefying the foreign exchange market, spearheaded by leading domestic and Africa-focused entities, are actively being developed to address economic issues in Nigeria.
This recent development builds upon earlier discussions between Afrexim Bank and oil traders to secure financing for a $3 billion commitment pledged to the Nigerian National Petroleum Company Limited (NNPCL). The joint announcement from Cairo, Egypt, where NNPCL and Afrexim Bank officially signed a commitment letter and termsheet for an urgent $3 billion loan, underscores the ongoing efforts to empower NNPC Limited to play a crucial role in supporting the Federal Government’s fiscal and monetary policy reforms.
In conclusion, the US$2.25 billion loan disbursement to Nigeria, facilitated by Afrexim Bank with UBA as the local arranger, represents a significant step in addressing Nigeria’s foreign exchange challenges. This collaborative effort, involving key stakeholders and major players in the financial sector, underlines the commitment to supporting Nigeria’s economic stability and growth. As the remaining balance of the facility is set to be disbursed in the coming months, the impact of this financial arrangement is poised to further bolster Nigeria’s financial resilience and stability.
In summary, the collaboration between Afrexim Bank, UBA, NNPC, and other key participants underscores the collective effort to address Nigeria’s financial challenges and pave the way for sustainable economic growth. With the ongoing developments aimed at addressing Nigeria’s economic issues, the future holds promise for enhanced financial stability and resilience in the region.