In a significant development, the federal government has successfully received $2.25 billion from the much-anticipated $3.3 billion foreign exchange (FX) facility provided by the African Export–Import Bank (Afreximbank). This influx of FX is a crucial step to address the acute shortage that has impeded economic activities and eroded investors’ confidence in the country.
Earlier commitments by President Bola Tinubu in December reassured Nigerians of the government’s dedication to resolving FX backlogs through substantial funds injected into the market. Tinubu, speaking at the 2023 Bank Directors’ Summit in Abuja, emphasized the critical role of funding liquidity in the FX market as a short-term yet essential solution for the current economic climate.
Amid concerns from investors and stakeholders about the government’s commitment to inject between $7 billion to $10 billion into the FX market, Tinubu, represented by Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, affirmed that there was no reason to doubt the earlier indications, emphasizing the time it takes to implement such initiatives.
The receipt of the first tranche of the funding intervention, amounting to $2.25 billion, brings relief to both the federal government and investors. The remaining balance of $1.05 billion is expected next week, marking a crucial milestone in addressing the FX challenges.
The minister highlighted that the official announcement of the disbursement rests with Afreximbank, the lead arranger of the $3.3 billion loan. He expressed optimism that the diverse support mechanisms being explored would contribute to comprehensive improvements in government finances and FX liquidity, affirming Nigeria’s positive trajectory.
Afreximbank’s role as the lead arranger in the $3.3 billion loan involves collaboration with sub-lenders, including prominent entities such as VITOL, Guvnor, Sahara Energy Group, Oando, and the United Bank for Africa, which contributed $100 million.
This development follows an earlier announcement in August, where the Nigerian National Petroleum Company Limited (NNPC) secured a $3 billion emergency loan from Afreximbank to stabilize the country’s volatile foreign exchange market. The deal, coming over a year after a $5 billion corporate finance commitment from Afreximbank to fund major investments in Nigeria’s upstream sector, is expected to boost foreign exchange liquidity and support the value of the naira against the dollar.
Analysts and business leaders have applauded Afreximbank’s efforts, recognizing the significant impact of these funds in mitigating exchange rate volatility and alleviating the pressures of rising inflation. This financial infusion marks a pivotal moment in Nigeria’s economic landscape, signaling a positive turn in addressing crucial FX challenges.
Source: This Day
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