The Federal Government of Nigeria and Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, defended the $5bn Abu Dhabi loan facility with First Abu Dhabi Bank while rejecting calls for detailed disclosure of how the funds would be spent.

Oyedele said the financing arrangement had received approval from the National Assembly and was primarily designed to refinance more expensive government debt while providing funding flexibility for infrastructure and budgetary needs.

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The minister’s comments come after the Federal Government accessed about $1.5bn from the facility, representing its first reported drawdown from the $5bn Total Return Swap arrangement.

The transaction has attracted significant scrutiny because of its complex structure and the limited public disclosure of some of its contractual terms.

Oyedele, however, pushed back against the criticism, arguing that the facility should not be treated differently from Nigeria’s other sources of government financing.

“We will not publish how we are spending it. We will publish how we spend government money. There’s nothing special about that loan,” Oyedele said.

The minister maintained that the arrangement had not been conducted secretly, stressing that the National Assembly had considered and approved the facility.

“The loan was approved not only by FEC, it was taken to National Assembly,” he said.

President Bola Tinubu had sought approval in March for a structured Total Return Swap financing programme of up to $5bn from First Abu Dhabi Bank.

The proposal was intended to provide funding in tranches for budget implementation, priority infrastructure and the refinancing of relatively expensive domestic and external obligations.

The National Assembly approved the facility on March 31, 2026.

The government subsequently began drawing from the arrangement in phases rather than accessing the full amount at once.

Oyedele explained that the staggered approach was deliberate, saying the government wanted to avoid paying costs on funds that had not yet been deployed.

“You don’t want to take all the money at once because if you don’t spend it at once, you incur cost on the extra amount you’ve taken,” he said.

The financing structure differs from conventional fixed-rate borrowing.

Available details indicate that the facility carries a floating rate linked to SOFR, with reports putting the margin at about 395 to 400 basis points, while Nigerian government securities worth roughly 133 per cent of the amount drawn are pledged as collateral.

Oyedele said the flexible structure could ultimately reduce the government’s borrowing costs, particularly if global interest rates decline.

“This First Abu Dhabi Bank transaction is flexible rates. It means if rates go up, we pay more. If rates come down, we benefit more,” he said.

The government has presented debt refinancing as a central justification for the facility.

Oyedele argued that replacing more expensive obligations with cheaper financing could generate savings for the country.

“So the objective is to use it to refinance expensive debt so you can save money,” the minister said.

However, international financial institutions have raised concerns about the risks attached to the arrangement.

The International Monetary Fund cautioned Nigeria in June that Total Return Swap structures could be opaque and difficult to assess because important terms may not always be sufficiently transparent.

IMF Resident Representative in Nigeria, Christian Ebeke, urged the country to carefully consider the risks associated with such financing.

Fitch Ratings also warned that the arrangement could create additional debt-management and liquidity risks.

The agency noted that limited disclosure of pricing, fees, collateral requirements and termination conditions could make it harder for lawmakers and investors to assess the true scale and cost of sovereign borrowing.

The concerns are particularly important because the collateral arrangement means Nigeria could face additional financial pressure if market conditions deteriorate.

Under the reported structure, the government would pledge securities worth more than the amount it draws from the facility.

Despite the controversy, the Federal Government has continued to defend the transaction as a legitimate financing tool rather than an attempt to conceal public borrowing.

Oyedele said the Ministry of Finance and the Debt Management Office would publish frequently asked questions to provide further clarification about the facility.

“In the next few days, you will see on the website both the Ministry of Finance and DMO the frequently asked questions about this particular debt or bond,” he said.

The forthcoming clarification could help address some of the concerns surrounding the facility, particularly as Nigeria seeks to balance its need for cheaper foreign-currency financing with demands for stronger public accountability.

For the government, the central argument remains that the facility can help replace costlier debt and improve fiscal flexibility.

For the IMF and Fitch, the key issue is whether the benefits can be achieved without creating less visible financial obligations or weakening transparency.

The debate therefore goes beyond the immediate $1.5bn drawdown.

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It raises a broader question about how Nigeria manages innovative borrowing instruments while ensuring that taxpayers, lawmakers and financial markets can clearly understand the country’s obligations.