Connect with us


Afeximbank and UBA Disburse $2.25 Billion in Oil-for-Cash Loan Facility to Boost Nigeria’s Economic Stability



UBA House Marina

The African Export-Import Bank (Afreximbank) and the United Bank for Africa (UBA) have successfully disbursed $2.25 billion as part of a $3.3 billion oil-for-cash loan facility arranged by the Nigerian National Petroleum Company Limited (NNPCL).

This financial injection, marked by an initial disbursement, carries substantial implications for the nation’s economic resilience.

The Local Arranger and Onshore Account Bank for this transformative transaction, UBA, disclosed that the five-year facility bears a margin of 6.0 per cent per annum above the three-month secured overnight financing rate.

This strategic arrangement is poised to empower Nigeria economically and create opportunities for sustainable growth.

A notable aspect of the transaction structure is the embedded price balance mechanism, ensuring that 90 per cent of all excess cash generated from the sale of committed barrels will be released to the borrower, with the remaining 10 per cent allocated to repaying the facility.

This mechanism effectively accelerates the final maturity of the facility, freeing up cash flow from future pledged cargoes for use by Nigeria.

Commenting on the successful financial close, Afreximbank President and Chairman of the Board of Directors, Professor Benedict Oramah, emphasized the bank’s commitment to supporting African economies during critical periods.

He highlighted that the disbursement of the initial $2.25 billion under the facility aligns with Afreximbank’s dedication to fostering Nigeria’s long-term economic stability, facilitating access to import financing for essential goods and raw materials, and supporting industrialization and trade development efforts.

NNPCL Group Chief Executive Officer, Mele Kolo Kyari, acknowledged that the facility’s proceeds have been made available to the federal government, strategically contributing to enhancing macro-economic stability.

He emphasized that the global, international, and regional syndication firms’ participation underscores the lending market’s confidence in Nigeria and signifies a solid market endorsement for financing sponsored by NNPCL.

This collaborative effort between Afreximbank, UBA, and NNPCL stands as a testament to the financial community’s support for Nigeria’s economic growth.

The successful disbursement of the initial $2.25 billion from the oil-for-cash loan facility marks a pivotal milestone in fortifying the nation’s economic foundations and fostering sustainable development.

As Nigeria navigates the economic landscape of 2024, this financial infusion serves as a catalyst for prosperity and resilience.

Continue Reading


Government Revenue Surges to N2.07trn in January 2024, FAAC Discloses




The Federal Accounts Allocation Committee (FAAC) has revealed a significant surge in government revenue to N2.07 trillion in January 2024.

This substantial increase reflects the buoyancy of Nigeria’s economic activities despite various challenges faced by the nation.

According to FAAC’s communiqué issued after its monthly meeting in Abuja, the N2.07 trillion revenue was distributed to meet the financial needs of the federal, state, and local governments.

N1.15 trillion out of the total revenue was disbursed to the various tiers of government, indicating a robust financial inflow.

The breakdown of the revenue distribution showcased that the Federal Government received N407.267 billion, state governments obtained N379.407 billion while N278.041 billion was disbursed to local governments.

Also, N85.101 billion, equivalent to 13% of mineral revenue, was allocated to the states as derivation revenue.

FAAC also highlighted that the revenue composition included N463.1 billion from distributable statutory revenue, N391.8 billion from distributable Value Added Tax (VAT) revenue, N15.9 billion from Electronic Money Transfer Levy revenue, and N279.03 billion from exchange difference revenue.

Despite the impressive revenue figures, FAAC noted a decrease in VAT collection by N71.7 billion compared to the previous month.

This decrease suggests fluctuations in consumer spending and economic activities, which could be influenced by various factors such as policy changes, economic conditions, and consumer sentiment.

Furthermore, FAAC reported increases in revenue from Companies Income Tax, Import Duty, Petroleum Profit Tax, and Oil and Gas Royalties.

However, revenue from Value Added Tax, Export Duty, Electronic Money Transfer Levy, and CET Levies experienced declines during the period.

FAAC’s disclosure of the January 2024 revenue underscores the importance of prudent financial management and effective allocation of resources to drive sustainable economic growth and development in Nigeria.

Continue Reading


Private Sector Credit Hits Record High of N76.94 Trillion in January 2024 – CBN Report



Private employers

Private sector credit in Nigeria reached a record N76.94 trillion in January 2024, according to the latest report from the Central Bank of Nigeria (CBN).

This represents a 85.2% year-on-year increase from N41.54 trillion reported in January 2023.

The CBN’s Money and Credit Statistics report unveiled that credit to the private sector experienced a substantial month-on-month surge of 23.06%, or N14.42 trillion, from N62.52 trillion in December 2023.

This surge occurred amid the implementation of the CBN’s policy to unify the naira exchange rate.

Analysts attribute the reported N76.94 trillion credit to the private sector to the recent depreciation of the naira against foreign currencies.

The naira closed at N1,356.88 per dollar in January 2024, representing a 50.87% decline or N457.49 against the dollar compared to December 2023.

This depreciation compelled banks to extend credit to major corporations to meet the CBN’s mandated Loan-to-Deposit Ratio (LDR) threshold.

The CBN’s decision to resume the enforcement of the LDR policy, effective July 31, 2023, further propelled banks to increase lending to customers, stimulating the real sector of the economy.

With the CRR mechanism updated, banks with an LDR below the prescribed level faced a 50% lending shortfall penalty.

Experts suggest that the significant increase in private sector credit underscores the growing need for businesses to secure funds amidst economic uncertainties and exchange rate volatility.

It also signifies banks’ efforts to comply with regulatory requirements and support economic growth initiatives.

As Nigeria navigates its economic landscape, stakeholders anticipate further developments in credit dynamics and monetary policies to sustain financial stability and stimulate economic expansion.

Continue Reading


Senate Initiates Probe into N30tn Ways and Means Loans under Buhari Administration



Muhammadu Buhari

The Nigerian Senate has embarked on a comprehensive investigation into the disbursement and utilization of the N30 trillion Ways and Means loans obtained by the Central Bank of Nigeria (CBN) during the administration of former President Muhammadu Buhari.

The Ways and Means facility allows the CBN to provide financial support to the government to cover budget shortfalls.

The decision to probe the massive loans comes amid concerns about the transparency and accountability surrounding the utilization of these funds, particularly as the country grapples with economic challenges, food crises, rising inflation, and worsening insecurity.

The Senate’s investigation aims to shed light on how the substantial overdrafts from the CBN were acquired and expended under the leadership of former President Buhari.

There is growing apprehension that the indiscriminate spending of the overdrafts, particularly during Godwin Emefiele’s tenure as CBN governor, may have contributed significantly to the current economic predicament facing the nation.

The probe will delve into the details of the N30 trillion overdrafts, with a specific focus on examining the purpose for which the funds were allocated and how they were utilized.

Also, the Senate will scrutinize the N10 trillion disbursed under the Anchor Borrowers Scheme, as well as the utilization of $2.4 billion out of the $7 billion earmarked for forex transactions.

The initiative underscores the Senate’s commitment to ensuring transparency, fiscal responsibility, and prudent financial management in the country’s economic affairs.

It is anticipated that the probe will unearth vital insights into the financial transactions of the past administration, enabling corrective measures to be taken to address any mismanagement or discrepancies discovered.

Continue Reading