Nigeria is set to receive a $1 billion loan from the African Export-Import Bank (Afreximbank) next month, as a segment of a wider crude oil prepayment facility designed to enhance foreign exchange (forex) reserves and bolster the economy.

“The verification of the crude availability has happened so we expect in the next month to finalise the release of the balance. Based on future production, you get the money,” explained Senior Executive Vice President for Finance, Administration, and Banking at Afreximbank, Denys Denya, to Bloomberg.

This allocation is part of a $3.3 billion, crude oil prepayment facility, orchestrated by the Nigerian National Petroleum Company Limited (NNPCL). Afreximbank previously disbursed $2.25 billion in January, with a subsequent tranche of $1.05 billion anticipated.

Nigeria is poised to receive the outstanding $1.05 billion in May, as stated by Denya.

As Africa’s leading oil producer, Nigeria will utilise the sales proceeds from crude by the Nigerian National Petroleum Corporation Limited (NNPCL) to repay the loan.

In January, Afreximbank announced, “This financing marks the largest syndicated loan secured by Nigeria in the International market and represents one of the biggest syndicated debts arranged in Africa in recent years.”

In 2022, Nigeria did not capitalise on the surge in oil prices as it endeavoured to increase production while oil prices exceeded $100 per barrel. The nation has faced ongoing challenges with foreign currency shortages and limited economic diversification beyond crude oil exports.

Upon the initial loan disbursement, NNPCL Group Chief Executive Officer, Mele Kolo Kyari, said, “The proceeds of the facility have been made available to the Federal Republic of Nigeria as one of several efforts towards improving macro-economic stability.”

“The engagement of global, international, and regional syndication firms underscores the lending market’s interest in financing orchestrated by NNPCL and demonstrates robust market trust in Nigeria,” Kyari further stated.