February 27, 2024
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The Central Bank of Nigeria (CBN) has said that it will collaborate with relevant agencies to impose appropriate sanctions after a forensic review uncovered severe infractions, widespread abuse, and substantial non-compliance with market regulations around foreign exchange transactions. 

This is according to Mrs Hakama Sidi Ali, the Acting Director of the Corporate Communications Department at the CBN, in a statement on Wednesday. 

She elaborated that the CBN had commissioned an independent forensic review conducted by a renowned firm, which served as the basis for these crucial decisions. 

Mrs Sidi Ali also stressed the CBN’s resolute determination to cleanse the financial services sector, still trust among all market participants, and build confidence among both internal and external stakeholders in the Nigerian economy. 

 “The CBN Acting Director, Corporate Communications Department, Mrs. Hakama Sidi Ali, disclosed this in Abuja on Wednesday, January 17, 2024, explaining that the Bank had commissioned an independent forensic review by a reputable firm. She also disclosed that payment of the forex backlog for qualified transactions had commenced.

“She, however, noted that the review revealed grave infractions, gross abuse, and significant non-compliance with market regulations, and appropriate sanctions would be enforced in collaboration with relevant agencies.

“Mrs Sidi Ali stressed the CBN’s resolve to sanitize the financial services sector and foster trust among all market participants, as well as internal and external stakeholders, in the Nigerian economy. Nevertheless, she said the CBN will continue to settle the legitimate foreign exchange backlog as it has consistently been doing in the last three months.”

The CBN also said that it has carried out a major financial injection of approximately $2 billion spanning diverse sectors, including manufacturing, aviation, and petroleum.

It highlighted the successful clearance of the entire liability of 14 banks, marking a significant milestone in resolving the forex backlog, and initiated settlements with foreign airlines.

The value of the Nigerian currency has been steadily declining as the country struggles with foreign exchange illiquidity and the inability to pay down its forex backlog.

Recent remarks by President Bola Tinubu indicate that he intends to pay off the almost $7 billion in outstanding foreign exchange obligations owed to banks. At the 29th Nigerian Economic Summit in Abuja, Tinubu acknowledged the challenges faced by the corporate sector in the financial markets and pledged additional foreign exchange liquidity.

It was also learned that the CBN has started paying off some of its foreign exchange debts with banks like Citibank, Stanbic IBTC, and Standard Chartered. The CBN earlier said it made tranche payments to 31 banks to clear the backlog of foreign exchange forward obligations.

Foreign airlines recently disclosed that about 90% of their $783m trapped funds were yet to be paid. However, the CBN has made some effort in this regard. The settlement of these liabilities is a response to the International Air Transport Association’s concerns and is expected to enhance the operational efficiency and financial health of these airlines in the Nigerian market​​​​. 

Although the EIU said  that a currency float may not succeed over 2024-28, as the CBN “lacks the firepower to adequately supply the market or clear a backlog of foreign exchange orders, valued at over US$6bn, which will keep foreign investors unnerved”, it is likely that the recent $2.5 billion facility, arranged by the African Export-Import Bank (Afrexim Bank) may have strengthened the CBN’s firepower. 

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