$22.5m for ‘Other Charges’: The UAE Loan’s Compliance Red Flags

The Federal Government paid $22.5m in charges on its $1.5bn Total Return Swap financing from First Abu Dhabi Bank (FAB) in the second quarter of 2026, raising fresh questions about transparency, disclosure and risk governance around the controversial facility.

The payment, equivalent to 1.5 per cent of the amount drawn, was recorded by the Debt Management Office (DMO) entirely as “other charges.” No principal or interest payment was recorded during the quarter. Crucially, the DMO did not disclose what the charge represented—whether arrangement, commitment, transaction or other fees.

That accounting treatment is the first compliance flashpoint.

For a sovereign transaction involving public funds, material charges should be sufficiently transparent to enable Parliament, auditors, markets and citizens to understand what was paid, why it was paid and under which contractual provision.

The structure itself raises another red flag. Nigeria can draw up to $5bn under the programme while providing naira-denominated Federal Government securities as collateral. The collateral requirement can reach 133.3 per cent of the amount drawn—potentially about $2bn against the initial $1.5bn drawdown.

International institutions have also flagged the risks. The IMF described Total Return Swap structures as potentially opaque and warned about margin calls, collateral-value deterioration and currency movements. Fitch similarly highlighted transparency, liquidity and debt-management concerns

Compliance takeaway

The issue is not simply that Nigeria paid $22.5m. It is that a significant public-finance cost remains insufficiently explained.

Until the underlying fee is clearly identified and the transaction’s collateral, valuation, termination and margin-call mechanisms are fully disclosed, the facility remains a governance and transparency risk—not merely a financing instrument.