The African Export-Import Bank (AFREXIM) finds itself in a financial conundrum as it attempts to fulfill its commitment to provide a $3 billion loan to the Nigerian National Petroleum Corporation Ltd (NNPCL).
Empowered Newswire can exclusively report that AFREXIM, not being a depositors’ bank, is unable to raise the entire loan amount on its own.
Official sources within the Federal Government circles have revealed that the loan, apart from supporting NNPCL, also aims to bolster foreign exchange liquidity and stabilize the Naira in the FX market.
This initiative comes in the wake of the termination of the Dual Foreign Exchange policy, intended to sanitize the FX market.
AFREXIM, however, can only raise $500 million independently. Consequently, it has embarked on a quest to secure the remaining funds through loans from global banks in the United States, Singapore, India, and other regions.
Sources in New York’s financial circles confirm that AFREXIM’s staff and agents have been actively seeking funds and financial instruments, notably from top American banks such as JP Morgan Chase and Citigroup.
However, the decision to involve a third-party non-deposit financial institution has raised concerns in industry circles. Some US banks question the credibility of this approach, suggesting that Nigeria has well-established executives in international financial markets who could provide a more credible and cost-effective means to raise the required funds.
Prominent figures like Mr. Bayo Ogunlesi and Mr. Jide Zeitlin, both Nigerian citizens, have proven track records in the financial world. Ogunlesi chairs the private equity firm Global Infrastructure Partners, while Zeitlin was the former CEO of Tapestry, the parent company of luxury brands such as Coach and Kate Spade.
Kase Lawal, a Texas-based oil business guru and chairman of Unity National Bank of Texas, also offers potential avenues for fund acquisition.
In addition to engaging US banks, AFREXIM is reportedly exploring options with international oil traders. However, there are concerns about increased risks and associated costs due to the involvement of a broker rather than a deposit bank.
In August, NNPCL announced securing the $3 billion loan from AFREXIM, which would be repaid using future crude oil production. This loan is expected to facilitate tax and royalty payments and help stabilize the Naira, ultimately reducing fuel costs for the Nigerian populace.
AFREXIM, known for its profit-driven trade finance model, operates across 52 African countries and has a diverse set of shareholders, including public and private entities. It remains to be seen how the bank will navigate this complex financial challenge and fulfill its commitment to support NNPCL and the Nigerian government.
