Nigeria Secures $1 Billion Concessionary Loan From AfDB 

The African Development Bank (AfDB) has granted Nigeria’s cabinet a $1 billion concessionary loan to support the nation’s budget financing.

The minister said; “There was financing of $1billion concessional financing, 25 years, eight years moratorium at about the same for 4.2% per annum, which was approved by the African Development Bank for this administration.”

“It was in recognition of the macro-economic measures that have been taken, the swift movement towards macro-stability, restoring revenue, improving the foreign exchange situation, and so forth, that have been taken by this government,”

“The reward, as far as the African Development Bank, a concessional financing organization, was to provide $ 1 billion in general budget support.”

The minister for Nigeria also mentioned that in an effort to lower debt servicing expenses, the Federal Executive Council had approved a cap of 2 trillion naira for the refinancing of costly government debt. According to Edun, Nigeria might avoid paying off debt to the tune of at least N50 billion.

Nigeria has been using the majority of its income, primarily from low tax collection, to pay off debt. In 2023, Nigeria’s debt service to revenue ratio is projected to be 73.5%.

“In order to keep working hard and maximizing the ability of the government to use the markets and to take advantage of different situations and improve situations, the Federal Executive Council approved a total limit of N2 trillion to be available for use by the Ministry of Finance to go in and out of the market and essentially to, where possible, bring down the rate of interest on the current outstanding,”

“So essentially, it will be refinancing and the view is that there will be an opportunity to save about N50 billion or more in debt servicing over time by giving back expensive debt refinancing with cheaper funding,” he said

President Bola Tinubu has started reforms since taking office in May in an effort to revive the largest economy in Africa after it had been in decline for nearly ten years. The removal of its costly fuel subsidy and the opening up of the foreign exchange market are two of these reforms that have caused the naira to depreciate by more than 40%.