Market News

Stakeholders including the Organized Private Sector (OPS) have warned that the continued delay by the Central Bank of Nigeria (CBN) to settle matured Foreign Exchange (FX) forwards could erode confidence in the country’s fragile economy.

This followed revelation that several matured transactions between 2022 and 2023 had not been cleared by CBN, putting several companies in operational dilemma as millions of jobs are currently threatened by the development.

Analysts said the apex bank needed to act quickly to resolve pending transactions that occurred between 2022 and 2023.

Earlier in March, the central bank said all valid FX backlogs owed to various sectors of the economy had been settled, fulfilling a key pledge of the CBN Governor, Mr. Olayemi Cardoso, to process an inherited backlog of $7 billion in outstanding liabilities.

Cardoso earlier in March revealed that about $2.4 billion out of the acclaimed $7 billion outstanding foreign exchange liabilities of the federal government were not valid for settlement.

He said while the bank had settled verified FX requests which amounted to $2.3 billion at the time, the total outstanding FX obligations remained at $2.2 billion.

The central bank governor further indicated that part of the headline $7 billion outstanding FX claims were not valid, citing the outcome of a forensic audit by Deloitte Management Consultant which the apex bank commissioned.

He maintained that the CBN would not pay for FX requests that are not validly constituted, adding that the bank had written to authorised dealers to explain the disparities identified.

Furthermore, Cardoso said the bank had contracted the Economic and Financial Crimes Commission (EFCC) to investigate suspicious transactions to prosecute individuals and entities with fraudulent entries.

But companies whose monies have been trapped have expressed concerns that the outcome of the probe had taken too long to conclude as their companies continued to suffer.

Most of them had used bank confirmed lines to open Letters of Credit (LCs), paid import duties, and received the goods, while suppliers were mostly settled by their banks’ correspondent banks.

They said while the CBN claims the   EFCC was investigating, the companies are bleeding and are under intense pressure from their banks and their suppliers.

The companies could lose about N2.4 trillion as a result of the continued delay in settling the forwards they said.

The stakeholders therefore, called on the central bank to promptly settle the forwards and get EFCC to prosecute companies involved in any act of round-tripping or abuse in the utilisation of the liquidity.

They cautioned that the continued delay in settling the outstanding liabilities of companies had far-reaching implications for the companies and the economy in general.

Commenting on the implications of unresolved FX liabilities, Economist/Chief Executive, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, also called on the CBN to clear outstanding forward transactions.    

Yusuf noted that the current operating environment for most businesses remained extremely challenging, particularly with the real sector and small businesses.

He said, “There are macroeconomic headwinds, there are structural impediments, there are multidimensional supply chain challenges.  

“Profitability and sustainability of many businesses are at risk. In truth, the plight of workers amid the cost-of-living challenges is a cause for concern.  

“But the difficult operating environment for businesses is equally very troubling. These two considerations matter in this conversation and require some delicate balancing.   It is only a business that is thriving that can retain or create new jobs.”