Forex crisis: NNPCL moves to defend naira with $3bn AFREXM loan

The Nigerian National Petroleum Company Limited has secured a $3bn emergency loan from the African Export-Import Bank to ease pressure on the naira.

At an event held in Cairo, Egypt, both parties jointly signed a commitment letter and Termsheet for the emergency loan of $3bn.

This transaction will provide some immediate disbursement that will help NNPCL support the Federal Government in its ongoing fiscal and monetary policy reforms aimed at stabilizing the exchange rate market.

The move is expected to boost foreign exchange liquidity in the country and will further drive down the exchange rate between the naira and the dollar.

This is the fourth transaction being consummated between NNPCL and AFREXIM Bank over the last 3 years and goes to further consolidate the mutual relationship between the two entities.

Both Nigeria and NNPCL are shareholders in AFREXIM Bank, with the sole purpose of enhancing investments and growing prosperity in Africa

The agreement for the loan which was sealed on Wednesday in Cairo, saw the Group Chief Executive Officer of NNPC Ltd, Mallam signing for the National Oil Company while Dr George Elimbi, Executive Vice President Afreximbank signed for the bank.

The deal is coming about 17 months after the NNPCL secured a $5bn funding commitment from the African Export-Import Bank (Afreximbank) to finance major investments in Nigeria’s upstream sector.

The $5bn deal was an offshoot of the meeting between Benedict Oramah, chairman of the board of directors and president of the African Export-Import Bank (Afreximbank) and the NNPC team led by Kyari, in Cairo, Egypt

In November 2021, AFREXIM Bank signed a $1.04bn deal with the NNPC limited at the Intra-African Trade Fair (IATF) in Durban, South Africa.

Then, the NNPC said this move marks a major achievement in its quest to scale up investments in the oil and gas industry following the commencement of the implementation of the Petroleum Industry Act.

The Petroleum Industry Bill was signed into law on August 16th, 2021, by former President Muhammadu Buhari.

Following the assent, NNPC was incorporated by the Corporate Affairs Commission (CAC) after an application for its registration from the federal government.

 

The new legislation provides room for business opportunities that would enable the NNPC to earn more revenue and attract foreign direct investment into the Nigerian energy sector.

. ..Manufacturers task FG, CBN, others to tackle inflammation.

 

Meanwhile, Manufacturers and industrialists have called for coordinated efforts from the government, the Central Bank of Nigeria (CBN), the private sector, and civil society to tackle inflation.

 

They said this on Wednesday in Lagos while reacting to the country’s surging inflation figure majorly driven by higher prices of food items.

 

Mr Segun Ajayi-Kadir, the Director-General of, the Manufacturers Association of Nigeria (MAN), attributed the persistent inflationary pressure to the fallout of recent government policy including the removal of fuel subsidies and the unification of exchange rate.

 

Ajayi-Kadir added that concerns about increasing energy costs and widespread insecurity in food-producing regions also exacerbated inflationary pressures.

 

He noted that the current inflationary condition in Nigeria was adversely affecting manufacturing operations, just like most other sectors of the economy.

 

Ajayi-Kadir listed some of its impacts including an increase in production cost, reduced profit margin, supply chain disruptions, uncertainty in planning, and reduced consumer spending.

 

He said a combination of the recommendations by stakeholders, tailored to Nigeria’s specific economic circumstances, could help mitigate inflationary pressures and promote sustained economic growth.

 

“Some of the ways that will ensure effective and conducive operations of manufacturers in the Nigerian economy include the CBN implementing effective exchange rate policies that prevent sharp depreciation of the currency.

 

“There should be increased targeted support to the agricultural sector to enhance productivity, reduce reliance on imports and stabilise food prices.

 

“Nigeria must continue to formulate policies that promote a stable and conducive business environment which can attract both local and foreign investments, leading to increased production, job creation, and ultimately, stability in prices.

 

“Government must commit to addressing the challenges of insecurity and should deploy fiscal reforms that prioritise productivity and intensify infrastructural development to stimulate economic activity, create jobs and improve living conditions,” he said.

 

Dr Chinyere Almona, the Director-General of, the Lagos Chamber of Commerce and Industry, expressed concerns about more inflationary pressures in the coming months due to the volatility of the Naira.

 

Almona charged the government to step up efforts to tackle food costs, especially staple food items.

 

“We commend the Federal Government’s declaration of a state of emergency on food security and urge them to prioritise farmers’ areas of assistance, fertilisers, and seeds.

 

“This would mitigate the effects of subsidy removal as well as strengthen strategic food reserves to be used as price stabilisation mechanisms.

 

“The Chamber implores the government to hasten the provision of the anticipated palliatives to lessen the impact of the rising trend in prices on economic agents,” she said.

 

The News Agency of Nigeria (NAN) reports that in July 2023, Nigeria experienced a surge in inflation, with the rate reaching a new 18-year high of 24.08 per cent.

 

This marks an increase of 1.29 per cent from the previous month’s rate of 22.79 per cent, as reported by the National Bureau of Statistics (NBS).

 

The increased food prices were attributed to planting season and logistic costs as the impact of fuel subsidy removal took its full course.

 

Notably, the most substantial price increases were observed in gas, air passenger transport, liquid fuel, vehicle spare parts, and fuels, lubricants for personal transport equipment, medical services, and road passenger transport. (NAN)(www.nannews.ng)

 

 

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