GMD/CEO, UBA Plc, Oliver Alawuba, and Chairman of UBA, Tony Elumelu
Efforts to boost Nigeria’s foreign exchange liquidity, especially the release of $2.25 billion FX support facility by the African Export-Import Bank (Afreximbank) have been lauded by financial analysts.
The $3.3 billion is expected to ease the FX liquidity crisis in Nigeria. The balance of the funds is expected this month.
Both Afreximbank and United Bank for Africa (UBA) closed on the liquidity support for Nigeria through a structured financing arrangement with the Nigerian National Petroleum Corporation Limited (NNPCL) on December 29, 2023.
Afreximbank is acting as the Mandated Lead Arranger along with UBA as the Local Arranger.
UBA is also acting as the Onshore Depository Bank for the transaction.
Gunvor, Sahara Energy and other major oil traders that are to join the parties.
The Managing Director/Chief Executive, Dignity Finance and Investment Limited, Dr. Chijioke Ekechukwu, has stated that the transaction will assuage FX concerns.
According to him, “We have a budget deficit, which can only be funded by borrowing or selling government assets or both. The other fundamentals that could increase our revenue base have been stretched ambitiously. This gives the government no other option but to continue to borrow.
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“Although the $2.25 billion loan will bring FX respite in the short run, it is not likely to sustain the FX market for more than one month.
“So, we expect the exchange rate to drop marginally with such injections, speculations, and other uses will, however, quickly drain the market of the available FX.”
Also, the Managing Director/Chief Executive, SD&D Capital Management Limited, Mr. Idakolo Gbolade, said the Afreximbank loan would ease the pressure on the naira.
He said: “The Dangote and Port Harcourt refineries coming on stream in January will help retain the much-needed FX in the system, while other government initiatives will bring in foreign investors which will start yielding fruits from Q1, 2024.”
On his part, the Chairman, Chartered Institute of Bankers of Nigeria (CIBN), Abuja Branch, Prof. Uche Uwaleke, said any forex inflow is welcomed.
“It’s a case of half bread is better than none,” he said.
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