With oil prices remaining low for two years in a row, Nigeria, Africa’s top oil producer is looking to diversify its revenues away from crude which it currently relies on for 70 percent of its income and 90 percent of foreign exchange. To achieve this, the country’s central bank is earmarking N500 billion ($2.5 billion) for loans to non-oil exporters.
The apex bank said it “will invest in a 500 billion naira debenture to be issued by Nigerian Export-Import Bank (NEXIM)”. Loans for up to three years would go at a maximum interest rate of 7.5 percent a year while loans of more than three years will be granted at 9 percent a year.
Apart from the low prices of oil, Nigeria also grapples with militant attacks on pipelines in its oil-rich region, pushing crude production to the lowest level in three decades. Now, it is working to nearly double its non-oil revenues this year to counter the effect of lost income from crude.
“The facility is essentially designed to redress the declining export credit and reposition the sector to increase its contribution to revenue generation and economic development,” the central bank said.
“It will improve export financing, increase access of exporters to low interest credit and offer additional opportunities for them to upscale and expand their businesses.”