Nigeria has officially drawn the first $1.5 billion from its $5 billion financing facility with First Abu Dhabi Bank (FAB), marking the initial tranche of the arrangement. Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, confirmed this after Monday's Federal Executive Council (FEC) meeting in Abuja.
Purpose of the financing
According to Oyedele, the financing package, previously approved by the National Assembly, will be used to refinance expensive debt, fund key infrastructure projects, and support budget implementation. "The approval for that loan went to the National Assembly, so everybody is aware of it. It's for refinancing of expensive debts, financing of infrastructure, as well as budgets," he said.
The minister noted that the government does not intend to announce every drawdown from the facility, describing it as a routine financing arrangement. "We don't want to start making press releases each time we do a drawdown. It is not different from any other loan," he added.
Phased drawdown strategy
Oyedele's remarks provide the first official confirmation of reports that Nigeria had begun utilizing the facility. Last week, Bloomberg reported that the country accessed approximately $1.5 billion through a Total Return Swap with First Abu Dhabi Bank. Explaining the structure of the deal, Oyedele said the $5 billion facility was designed to be accessed in phases rather than all at once, allowing the government to reduce borrowing costs by paying interest only on funds that have been drawn.
"The loan is meant to be a drawdown in tranches, and one of the advantages of that is, if you need $5 billion and you take everything at once, you start paying interest, even though you're not spending all of it now. So, this has been structured in a way that makes us even more efficient in the cost of borrowing by taking what we need part time," he explained.
Impact on debt management
The minister said the phased drawdown aligns with the government's broader debt management strategy aimed at lowering financing costs while providing funding for priority projects and budget execution. The facility is expected to help Nigeria manage its debt burden and support economic growth through targeted infrastructure investments.
