CBN Speaks on Verifying $2.4bn Foreign Exchange Claims by Manufacturers

• The CBN said it is looking into complaints of manufacturers and importers over forex claims worth $2.4bn
• The apex bank reported clearing $7 billion in foreign exchange forwards eight months prior to this most recent occurrence
• The CBN governor stated that the bank has finished the first round of verification and is currently working on the second

Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.

The Central Bank of Nigeria has started a re-validation process to find out why importers and manufacturers are complaining about $2.4 billion in foreign exchange claims.

CBN Governor Olayemi Cardoso made this revelation while speaking to the business community during a special summit dinner hosted by the Nigerian Economic Summit Group on Tuesday night in Abuja.

According to him, the bank has completed the first round of verification and is now working on the second to validate manufacturer claims.

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This latest development occurred eight months after the apex bank claimed to have cleared $7 billion in foreign exchange forwards, thereby removing a legacy burden.

However, under the Manufacturers Association of Nigeria's aegis, the real sector lodged a complaint against the apex bank for failing to settle unredeemed foreign exchange forward contracts incurred during the previous governor, Godwin Emefiele's administration.

In August, the group claimed that the ongoing inability to address the problems was putting a lot of strain on industries, leading them to report significant losses.

The MAN DG, Segun Kadir said:

“There is still the issue of the unsettled $2.4bn FX Forwards contract that the CBN, for inexplicable reasons, is still holding.

“Most of our big industries are declaring losses and some of these losses are traceable to this issue of not honouring FX Forwards contracts.”

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Reacting to this, Cardoso said,

“Our view is focused on managing inflation, and focus on stabilising prices, focus on foreign exchange management.

“In respect to the forwards, You know, at the time I spoke about this when I was going for my clearance at the Senate. All I knew was that there was a huge backlog, and there seemed to be a problem with the finances of the central bank.

The CBN governor stated that upon verification, there was a better understanding of the claims and the appropriateness of the claims.

He added

“I know that as of now, there are still some which have been unverified. We are working on those. We are at a particular stage now where we have gone through stage one, and we are back to stage two to verify those claims as it is now.

“But more important and very important, we had to ensure that we could walk the talk because that clearly and truly is the way to build credibility. No point in saying you do one thing and not do it. You have to be transparent in the way you undertake your operations.”

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Beyond clearing backlog, Samuel Oyekanmi, a research and insight associate with Norrenberger Financial Group opined that the focus should be on improving liquidity.

He said,

“What will be great is to ensure improved liquidity in the official market, bridging the arbitrage caused by the disparity between the official and the parallel market, and nip the impact of FX shocks on prices in the bud.”

Nigeria successfully repays foreign debts

Legit.ng reported the Central Bank of Nigeria (CBN) reported an increase in international payments of $3.31 billion in the first five months of 2024.

The figure represents a sharp increase of 30.8% rise from the $2.53 billion recorded during the same period in 2023.

Recent data from the apex bank shows that international debts, including foreign debt servicing, remittances, and payments for goods and services, are critical in maintaining Nigeria’s economic stability as they directly impact the country’s foreign reserves, including the exchange rate and other financial conditions.

Source: Legit.ng