* . *
  • About
  • Advertise
  • Privacy & Policy
  • Contact
Wednesday, September 17, 2025
Earth-News
  • Home
  • Business
  • Entertainment
    Gen V Season 2: What is The Odessa Project? – yahoo.com

    Gen V Season 2: Unlocking the Secrets of The Odessa Project

    PENN Entertainment stock rating reiterated at Market Outperform by JMP – Investing.com

    PENN Entertainment Stock Rated a Market Outperformer by Experts

    Here’s how NJ’s once-vibrant nightclub scene was born and why it died – Bergen Record

    The Rise and Fall of New Jersey’s Once-Vibrant Nightclub Scene: What Happened?

    The Emmys are back: Viewership soars to highest numbers in 4 years – yahoo.com

    The Emmys Return with a Bang: Viewership Hits a 4-Year High

    From Spinal Tap II to Ed Sheeran : your complete entertainment guide to the week ahead – The Guardian

    Fall’s Hottest Ski Films Are Going on Tour—Here’s the List – yahoo.com

    Experience the Thrill: Fall’s Hottest Ski Films Hit the Road-Don’t Miss the Tour!

  • General
  • Health
  • News

    Cracking the Code: Why China’s Economic Challenges Aren’t Shaking Markets, Unlike America’s” – Bloomberg

    Trump’s Narrow Window to Spread the Truth About Harris

    Trump’s Narrow Window to Spread the Truth About Harris

    Israel-Gaza war live updates: Hamas leader Ismail Haniyeh assassinated in Iran, group says

    Israel-Gaza war live updates: Hamas leader Ismail Haniyeh assassinated in Iran, group says

    PAP Boss to Niger Delta Youths, Stay Away from the Protest

    PAP Boss to Niger Delta Youths, Stay Away from the Protest

    Court Restricts Protests In Lagos To Freedom, Peace Park

    Court Restricts Protests In Lagos To Freedom, Peace Park

    Fans React to Jazz Jennings’ Inspiring Weight Loss Journey

    Fans React to Jazz Jennings’ Inspiring Weight Loss Journey

    Trending Tags

    • Trump Inauguration
    • United Stated
    • White House
    • Market Stories
    • Election Results
  • Science
  • Sports
  • Technology
    Bucking the Odds: Why Technology Companies Should Embrace Software Patents Today – Crowell & Moring LLP

    Bucking the Odds: Why Technology Companies Should Embrace Software Patents Today – Crowell & Moring LLP

    City IT presented Best of North Carolina Technology Award – RaleighNC.gov

    City IT Honored with Best of North Carolina Technology Award

    LELO Releases 2025 Futurist Report: Intergenerational Views on Relationships, Sex, and Technology – PR Newswire

    Exploring the Future: How Different Generations View Relationships, Sex, and Technology in 2025

    Will New Big Technology Engagements Reshape Innodata’s Growth Path? – Yahoo Finance

    Could New Major Tech Partnerships Propel Innodata to Unprecedented Growth?

    Unlocking AI Success: How People, Process, and Technology Form the Ultimate Triangle

    Billion-dollar coffins? New technology could make oceans transparent and Aukus submarines vulnerable – The Guardian

    Billion-Dollar Coffins? How New Technology Could Make Oceans Transparent and Expose Submarines

    Trending Tags

    • Nintendo Switch
    • CES 2017
    • Playstation 4 Pro
    • Mark Zuckerberg
No Result
View All Result
  • Home
  • Business
  • Entertainment
    Gen V Season 2: What is The Odessa Project? – yahoo.com

    Gen V Season 2: Unlocking the Secrets of The Odessa Project

    PENN Entertainment stock rating reiterated at Market Outperform by JMP – Investing.com

    PENN Entertainment Stock Rated a Market Outperformer by Experts

    Here’s how NJ’s once-vibrant nightclub scene was born and why it died – Bergen Record

    The Rise and Fall of New Jersey’s Once-Vibrant Nightclub Scene: What Happened?

    The Emmys are back: Viewership soars to highest numbers in 4 years – yahoo.com

    The Emmys Return with a Bang: Viewership Hits a 4-Year High

    From Spinal Tap II to Ed Sheeran : your complete entertainment guide to the week ahead – The Guardian

    Fall’s Hottest Ski Films Are Going on Tour—Here’s the List – yahoo.com

    Experience the Thrill: Fall’s Hottest Ski Films Hit the Road-Don’t Miss the Tour!

  • General
  • Health
  • News

    Cracking the Code: Why China’s Economic Challenges Aren’t Shaking Markets, Unlike America’s” – Bloomberg

    Trump’s Narrow Window to Spread the Truth About Harris

    Trump’s Narrow Window to Spread the Truth About Harris

    Israel-Gaza war live updates: Hamas leader Ismail Haniyeh assassinated in Iran, group says

    Israel-Gaza war live updates: Hamas leader Ismail Haniyeh assassinated in Iran, group says

    PAP Boss to Niger Delta Youths, Stay Away from the Protest

    PAP Boss to Niger Delta Youths, Stay Away from the Protest

    Court Restricts Protests In Lagos To Freedom, Peace Park

    Court Restricts Protests In Lagos To Freedom, Peace Park

    Fans React to Jazz Jennings’ Inspiring Weight Loss Journey

    Fans React to Jazz Jennings’ Inspiring Weight Loss Journey

    Trending Tags

    • Trump Inauguration
    • United Stated
    • White House
    • Market Stories
    • Election Results
  • Science
  • Sports
  • Technology
    Bucking the Odds: Why Technology Companies Should Embrace Software Patents Today – Crowell & Moring LLP

    Bucking the Odds: Why Technology Companies Should Embrace Software Patents Today – Crowell & Moring LLP

    City IT presented Best of North Carolina Technology Award – RaleighNC.gov

    City IT Honored with Best of North Carolina Technology Award

    LELO Releases 2025 Futurist Report: Intergenerational Views on Relationships, Sex, and Technology – PR Newswire

    Exploring the Future: How Different Generations View Relationships, Sex, and Technology in 2025

    Will New Big Technology Engagements Reshape Innodata’s Growth Path? – Yahoo Finance

    Could New Major Tech Partnerships Propel Innodata to Unprecedented Growth?

    Unlocking AI Success: How People, Process, and Technology Form the Ultimate Triangle

    Billion-dollar coffins? New technology could make oceans transparent and Aukus submarines vulnerable – The Guardian

    Billion-Dollar Coffins? How New Technology Could Make Oceans Transparent and Expose Submarines

    Trending Tags

    • Nintendo Switch
    • CES 2017
    • Playstation 4 Pro
    • Mark Zuckerberg
No Result
View All Result
Earth-News
No Result
View All Result
Home Business

Growing resource-backed loans seen threatening oil economy

May 17, 2024
in Business
Growing resource-backed loans seen threatening oil economy
Share on FacebookShare on Twitter

Nigeria’s oil-dependent economy faces a growing threat from resource-backed loans, which offer tempting sources of quick cash but come with significant risks, experts engaged by BusinessDay have said.

A resource-backed loan is a borrowing mechanism by which a country accesses finance in exchange for, or collateralised by future streams of income from its natural resources, such as oil or minerals.

Linking future revenue from natural resource exports to loan paydowns is often touted as a way for developing countries to get financing for infrastructure projects and for lenders to reduce the risk of not getting their money back, yet there are hidden dangers, according to the experts.

“Resource-backed loans are bad because you can’t price the assets properly,” Akinwumi Adesina, president of the African Development Bank Group (AfDB) said in a recent interview with Associated Press.

He added, “If you have minerals or oil under the ground, how do you come up with a price for a long-term contract? It’s a challenge.”

Adesina, whose Abidjan, Ivory Coast-based institution assists African countries in financing development projects, said these arrangements come with a litany of problems.

He pinpointed to the uneven nature of the negotiations, with lenders typically holding the upper hand and dictating terms to cash-strapped African nations.

“This power imbalance, coupled with a lack of transparency and the potential for corruption, creates fertile ground for exploitation”, Adesina said.

“These are the reasons I say Africa should put an end to natural resource-backed loans,” Adesina said.

He pointed to a bank initiative that helps “countries renegotiate those loans that are asymmetric, not transparent and wrongly priced.”

Adesina said loans secured with natural resources pose a challenge for development banks like his and the International Monetary Fund, which promote sustainable debt management.

“Countries may struggle to get or repay loans from these institutions because they have to use the income from their natural resources, typically crucial to their economies, to pay off resource-tied debts, he said.

Nigeria is the largest producer of crude in Africa with proven reserves of 36.97 billion barrels, yet the International Trade Administration, healthcare infrastructure said the country is still underdeveloped and lacks modern medical facilities.

Medical professionals are in short supply, with only about 35,000 doctors despite needing 237,000, according to World Health Organisation figures, partially due to the massive migration of healthcare workers overseas.

For Kelvin Emmanuel, a Lagos-based economist, the fundamental reason why resource-backed loans are not ideal is that the process of accurately pricing the value of assets over the shelf life of the facility is always going to favour the lender over the borrower.

“The Project Gazelle Deal that was structured as a forward sale agreement by NNPC Ltd is a cautionary tale on why the Nigerian Parliament needs to oppose resource-backed loans as though our lives depended on it,” Emmanuel said.

Last year, the Nigerian National Petroleum Company Limited’s (NNPC) $3.3 billion crude-for-cash loan from the African Export-Import Bank (Afreximbank) sparked debate and raised questions about its long-term implications for the nation’s economy.

To make the repayment, the NNPC said it would carry out a forward sale of 90,000 barrels per day of Nigeria’s share of offshore crude oil under the production sharing contract (PSCs) with the oil companies.

Giving details on the benchmark oil price, the NNPC said the facility uses a conservative crude price of $65 per barrel to calculate the allocated crude to be produced and sold in the future. Brent crude price traded at $78 on Monday.

“This provides a safety margin for price fluctuations in the future,” the NNPC said in a document signed by Olufemi Soneye, its chief corporate communications officer.

A senior energy expert who pleaded anonymity, said Project Gazelle’s interest rate, tenor and facilitation costs are a high burden for Nigeria’s economy.

“Interest rate at six percent; Secured Overnight Financing Rate at 11.85 percent pa tenor; five years facilitation cost and two percent to loan facilitators ($66m) are very expensive for taxpayers. The Nigerian government needs to be more transparent,” he added.

Another energy expert questioned NNPC’s decision to securitise $3.4 billion to stabilise the economy and pay back more than $8 billion to Afreximbank.

“To the best of my knowledge, the whole thing is not transparent enough for analysts and the public to scrutinise the deal which in retrospect, is not a good look for the parties involved,” he added.

Evelyne Tsague, a co-director at Natural Resource Governance Institute Africa (NRGI), said African leaders have often taken out these loans to help with their short-term political ambitions, but their countries have ended up severely indebted and with the risk of losing collateral worth more than the value of the loan itself.

“They should stop agreeing to such perilous deals, which are often negotiated by poorly managed state-owned enterprises that often bypass parliaments and national budgets,” Tsague said in a report titled Resource-Backed Loans: Pitfalls and Potential.

David Mihalyi, a co-author of the report and senior economic analyst with NRGI, said: “These deals, sometimes labelled as oil advances, often resemble pay-day loans: they have short maturities, high interest rates and fees, and no commitments on how the money will be used. Countries should stay away from oil advances containing such harmful terms.”

Apart from Nigeria, BusinessDay’s findings showed four African countries where resource-backed loans have contributed significantly to severe debt problems, including Angola, Chad, Republic of Congo and South Sudan.

At least 11 African countries have taken dozens of loans worth billions of dollars secured with their natural resources since the 2000s, and China is by far the top source of funding through policy banks and state-linked companies.

For instance, Chad faces challenges in restructuring its debt, as commercial lenders holding its oil-backed loans have minimal incentive to offer concessions while Zimbabwe recently initiated negotiations with a commodity trader to allocate revenues from its profitable gold and nickel mines toward settling its debts with the company.

Western commodity traders and banks, such as Glencore, Trafigura and Standard Chartered, also have funded oil-for-cash deals, notably with the Republic of Congo, Chad and Angola.

According to a 2022 research study by the World Bank, titled “Resource-Backed Loans in Sub-Saharan Africa,” these loans pose a threat to the countries when they do not spend them on assets that can be used to repay the loan.

“The IMF-WB (2020) concludes that collateralised transactions can be beneficial to a developing country borrower under a range of circumstances, but also points to risks and discourages this practice when the proceeds are not spent on assets that can be used to repay the loans when loans are excessively large, and when the details of such borrowings are opaque,” the study read.

>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : Businessday.ng – https://businessday.ng/energy/oilandgas/article/growing-resource-backed-loans-seen-threatening-oil-economy/

Tags: businessGrowingresource-backed
Previous Post

Demo Day: Accelerate at Circularity 24 Startups

Next Post

Explainer: Why banks with credit crunch avoid CBN

Washington State Honors Hanford Team for Protecting Native Habitat – Department of Energy (.gov)

Washington State Celebrates Hanford Team’s Success in Protecting Native Habitat

September 17, 2025
Kent State University unveils poetry inspired by science despite federal funding cut – Ideastream

Kent State University Unveils Science-Inspired Poetry Amid Federal Funding Cuts

September 17, 2025
Fired CDC director warns of backslide in US vaccine science under RFK Jr – Al Jazeera

Fired CDC director warns of backslide in US vaccine science under RFK Jr – Al Jazeera

September 17, 2025
Melting Pot Brings Back Its Most ‘Luxurious’ Fondue for a Limited Time – yahoo.com

Melting Pot Brings Back Its Most ‘Luxurious’ Fondue for a Limited Time – yahoo.com

September 17, 2025
Bucking the Odds: Why Technology Companies Should Embrace Software Patents Today – Crowell & Moring LLP

Bucking the Odds: Why Technology Companies Should Embrace Software Patents Today – Crowell & Moring LLP

September 17, 2025
Eleven Sports to bring WTA Tour to Polish fans in new five-year deal – WTA Tennis

Eleven Sports to bring WTA Tour to Polish fans in new five-year deal – WTA Tennis

September 17, 2025
The FCDO’s Approach to Displaced People – ReliefWeb

How the FCDO is Transforming Support for Displaced People

September 17, 2025
Indonesia ponders pro-growth mandate for central bank as economy flags – Financial Times

Indonesia ponders pro-growth mandate for central bank as economy flags – Financial Times

September 17, 2025
Gen V Season 2: What is The Odessa Project? – yahoo.com

Gen V Season 2: Unlocking the Secrets of The Odessa Project

September 17, 2025
Is the Economy as Healthy as Trump Claims? – The New York Times

Is the Economy as Healthy as Trump Claims? – The New York Times

September 17, 2025

Categories

Archives

September 2025
MTWTFSS
1234567
891011121314
15161718192021
22232425262728
2930 
« Aug    
Earth-News.info

The Earth News is an independent English-language daily published Website from all around the World News

Browse by Category

  • Business (20,132)
  • Ecology (824)
  • Economy (843)
  • Entertainment (21,722)
  • General (17,092)
  • Health (9,888)
  • Lifestyle (858)
  • News (22,149)
  • People (848)
  • Politics (853)
  • Science (16,055)
  • Sports (21,344)
  • Technology (15,826)
  • World (827)

Recent News

Washington State Honors Hanford Team for Protecting Native Habitat – Department of Energy (.gov)

Washington State Celebrates Hanford Team’s Success in Protecting Native Habitat

September 17, 2025
Kent State University unveils poetry inspired by science despite federal funding cut – Ideastream

Kent State University Unveils Science-Inspired Poetry Amid Federal Funding Cuts

September 17, 2025
  • About
  • Advertise
  • Privacy & Policy
  • Contact

© 2023 earth-news.info

No Result
View All Result

© 2023 earth-news.info

No Result
View All Result

© 2023 earth-news.info

Go to mobile version