In a significant move to stabilize Nigeria's foreign exchange market, the Federal Government has obtained a $925 million lifeline from the African Export-Import Bank (Afreximbank). This comes as the naira continues to struggle, trading near 1,500 per dollar in both official and parallel markets.
The local currency has faced considerable pressure in recent weeks due to forex shortages, prompting the Central Bank of Nigeria to implement various measures to support the naira. Despite these efforts, the naira has edged closer to 1,100 per dollar since April, driven by ongoing forex scarcity and speculative activities.
On Thursday, the naira closed at 1,481 per dollar in the official market, coinciding with the announcement of the $925 million disbursement under the $3.3 billion crude oil-backed prepayment facility managed by the Nigerian National Petroleum Company Limited (NNPC).
The $3.175 billion facility, coordinated by Afreximbank, is designed to help the government meet its dollar obligations, stabilize the forex market, and fund NNPC initiatives. The latest funding round raised $925 million from a consortium of crude oil off-taker lenders, including Oando Group and Sahara Energy Resource Limited.
Afreximbank's President, Prof. Benedict Oramah, highlighted the importance of this facility in supporting Nigeria’s economic growth and stability. NNPC's Group CEO, Mele Kyari, emphasized the significance of this investment in bolstering the nation's hydrocarbon resources and international partnerships.
As the naira appreciated to 1,481 per dollar, Fitch Ratings projected the currency would end the year at 1,450 per dollar, with potential gradual depreciation in the following year depending on forex reforms. The naira also traded flat at 1,495 per dollar on the parallel market.
Despite mixed reactions from the public concerning the $3.3 billion loan's implications for Nigeria’s oil production, NNPC defended the facility as a necessary measure to address the country's foreign exchange challenges. The funding aims to stabilize the naira, improve forex reserves, and support Nigeria’s economic objectives.
