The President and Chairman of the Board of Directors of the African Export-Import Bank (Afreximbank) has debunked claims that the $3.3b loan that the Nigerian National Petroleum Corporation Limited (NNPCL) acquired from the bank will be repaid with an interest rate of 12%. He said the loan is one of the best priced loans on the market with 6% margin.
Oramah revealed this in an exclusive interview with ARISE NEWS anchor, Ojy Okpe, describing the allegations of repaying the $3bn Loan with $12bn as ‘ridiculous’. He said the loan was very effective in helping FX shortage and stabilise the financial system.
During the interview, Oramah was asked about the nature of the loan, of which the NNPC has received $2.25 billion of the agreed $3 billion in a bid to stabilise Nigeria’s foreign exchange. He replied, “Well, the interest rate on the loan carries a margin of 6.0% per annum above the 3-month secured overnight financing rate (SOFR) that is the base rate which governs the cost of funds, so to say. So, if Afreximbank wants to lend money, any other person wants to lend some money, dollars, you start from there and it stays, then you add your margin. And the margin we have I think is 6%, and this loan is a seven year loan. Actually, it is one of the best priced loans in the market today.
“We’re not talking about three years ago, four years ago. We’re talking of today where interest rates have gone up, and we’re just hoping that inflation will go down globally so that rates can start going down. And in fact, if those rates start going down, the interest rate of this loan will start also going down. So that’s what I thought about it, about the pricing of the loan.
“And it’s transparent, there’s nothing to hide about it, and anybody who wants to compare it can compare it against the yields on the Nigerian bonds trading today.
Responding to Nigerians questions and misgivings regarding the loan, Oramah clarified that the loan is effective as he said, “It actually helps acute FX shortage. And you know there are things people do not know, maybe government will not be saying it, but I’m at liberty because we have a justification for doing what we did. It actually helps us stabilize the financial system.”
He went on to say, “It’s the job of government to do what they know is right actually. Of course, it’s good for the people to criticise ask questions and all that. But I just think that sometimes, people who are criticizing also have to be reasonable. You don’t have to go to the municipal and start telling stories, because if you genuinely want an explanation and you asked, for example, for us, we never got anybody right to us saying explain this to us.
“We’re not hiding anything. If anybody came and we thought we should, if it’s not a confidential matter, because everything we do is confidential. And by the way, we are not the only lender, there are other lenders. So, if it’s something that we believe we should explain, we explain.
The Afreximbank President then spoke about the Memorandum of Understanding he had signed with the Nigerian Health ministry to provide a $1 billion facility that would finance a contribution pool for private investors who want to invest in Nigeria’s health sector value chain.
Giving his reasoning behind this, he said, “I always believed that health care is human right. Every person on this earth should have access to good health care, because that is what makes you to live a wholesome life. It is not what we should just reserve for the very rich and mighty.”