By Nik Ogbulie (Lagos)
President and Chairman of Board of Directors of Afreximbank, Professor Benedict Oramah, in an exclusive AriseNews interview in Lagos has given a graphic explanation of the content of the about 3.1 billion dollars facility which his bank made available to NNPC, indicating that the much ado about the interest rate is unfounded as the loan deal was secured by a hedge which offers the bank some technical cover.
Oramah noted that the deal was a prepayment loan where future deliveries of cargoes are paid today. He said that it is a kind of loan you take a hedge to protect yourself from the unforeseen which has not been denominated in any particular percentage. The President said that his bank has exact cargoes that were pledged and this makes the periods of repayment shorter.
“It is not a case of mortgaging your future with the cargoes payment . The debate is really about what you do with your assets and not whether you are mortgaging your future”, he clarified.
On interest rates, he explained that the interest rate which the bank uses is so free and its our base rate.
“The margin we have is 6%.
We are only trying to help stabilise the financial system and any person that is asking otherwise is simply trying to be mischievous “.
Oramah, however feels that critics sometimes have to be reasonable because what the bank did is not a confidential matter because it passed through the processes of those that were involved , the same way loan deals have been conducted for so many countries in Africa.
On the Nigerian economy, a calm but obviously sad CEO, also noted that in the Nigerian economy other
things are happening at the same time and that is why it is getting difficult to have a control.
He said that the first thing to do is to stabilize the economy and when you stabilize the economy you do not pursue growth at the same time. He feels that what matters to the Nigerian market now is stability and not exchange rate because, according to him, it is volatility that markets do not like.
He advised that at that juncture, the major thing would be to reduce the social cost of the action being taken.
Oramah noted that the Nigerian economy is in this difficulty because we live on borrowed time; we were just exporting oil and getting today’s money and failing to improve our capacity, an action that all Petroleum producing nations in Africa found themselves.
Oramah’s very tacit response was in reaction to claims from a section of the media and the public raised over the loan facility to the NNPC, in a manner where aspersions were cast on the Afreximbank in a manner that indicated high handed deal that may not be in the interest of the poor state of the ailing Nigerian economy.
