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The Central Bank of Nigeria (CBN), the apex monetary authority of Nigeria announced that it has cleared all ‘valid’ foreign exchange backlogs. This move comes as a decisive step towards restoring confidence in Nigeria’s economy. According to CBN, it has recently completed the payment of USD 1.5 billion, effectively settling the remaining balance of the FX backlog owed to bank customers.
The process underwent meticulous scrutiny by independent auditors from Deloitte Consulting, ensuring that only legitimate claims were honoured. Any questionable transactions were promptly referred for further investigation. Clearing the FX backlog is a priority to restore credibility and confidence in the Nigerian economy. It is important to get it done through an independent and credible process that would determine the authenticity of those obligations, and, at this point, the bank has cleared all genuine, verifiable transactions. This encumbrance on market confidence in the country’s ability to meet its obligations is now totally behind, stated CBN Governor Olayemi Cardoso.
The clearance of the backlog of foreign exchange transactions is a component of the comprehensive strategy outlined in the previous Monetary Policy Committee meeting held last month. This strategy aims to stabilize the exchange rate, which in turn helps to mitigate imported inflation and boost confidence in both the banking system and the overall economy. The CBN also disclosed an increase in the country’s external reserves, noting that as of 7 March, the reserves reached USD 34.11 billion, the highest level in eight months. It said the rise was primarily driven by an uptick in remittance payments from Nigerians abroad and heightened purchases of local assets by foreign investors.
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The CBN uncovered invalid foreign overdue claims totaling USD 2.4 billion, which pressured the naira for a long time and spooked the currency market. Deloitte was hired by the CBN to investigate the claims, revealing USD 2.4 billion of the backlog as false claims due to missing import documents in some cases.
The result that came out of this was startling in a great respect. It discovered that of the roughly USD 7 billion, about USD 2.4 billion had issues, which had no business being there and the infractions on that ranged from so many things, for example not having valid import documents and, in some cases, entities that do not exist. There were account parties who had asked for foreign exchange and got more than they asked for. Some didn’t even ask for any and got. So there were whole loads of infractions there.
