Nigeria’s $1.5bn Abu Dhabi Drawdown to Cut Borrowing Costs, Says Oyedele

Nigeria’s decision to access only $1.5 billion from its $5 billion financing arrangement with First Abu Dhabi Bank (FAB) is a strategic move designed to lower borrowing costs and improve debt management, according to the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele. The minister made the disclosure while speaking with journalists after the Federal Executive Council (FEC) meeting in Abuja, providing the first official confirmation that the federal government has begun drawing from the facility.

Oyedele explained that the financing agreement was intentionally structured to allow Nigeria to access the funds in phases rather than taking the entire amount at once. According to him, this approach helps the government avoid paying interest on money that has not yet been put to use, making the borrowing process more cost-effective and financially prudent.

He noted that drawing down the facility in tranches offers significant advantages, especially at a time when governments around the world are looking for ways to manage rising debt obligations. By accessing only what is immediately needed, Nigeria can reduce unnecessary financing costs while ensuring that resources remain available for future priorities.

The minister also revealed that the financing arrangement had already received approval from the National Assembly and is expected to play a key role in refinancing costly existing debts, funding critical infrastructure projects, and supporting budget implementation. He stressed that the phased drawdown is a normal financial practice and should not be viewed differently from other government borrowing arrangements.

Oyedele’s remarks come days after reports emerged that Nigeria had started accessing the facility through a Total Return Swap arrangement. The confirmation signals the government’s commitment to balancing fiscal needs with responsible debt management, while leveraging external financing to support economic growth and development objectives.

source: Leadership