Nigerian President Asiwaju Bola Ahmed Tinubu, on Monday, promised to clear the foreign exchange contracts backlog, discouraging investors’ confidence.
This is as the naira continues its free fall at the parallel market.
Tinubu, while speaking at the ongoing Nigeria Economic Summit #NES29 in Abuja, also assured that Nigeria will honour all future foreign exchange contracts.
He said, “All foreign exchange future contracts will be honoured by this government. We have a line of sight to the foreign exchange we need to refloat this economy. And we will get it.”
It would be recalled that the Central Bank of Nigeria (CBN) sold forward contracts to several Nigerian businesses with the promise of dollars at an agreed price in future. In contrast, banks opened Letters of Credit (LCs) on the back of the forward contracts, which were used to buy goods from foreign suppliers.
However, the CBN has not settled the contracts since February 2023, which means there’s a backlog of around $3 billion, according to sources familiar with the matter.
The broader backlog, which includes unsettled foreign investors’ contracts, is estimated to be about $10 billion.
The CBN’s failure to clear the dollar backlog has put them in a very tight FX liquidity position. It has forced them to suspend several transactions, including school fees and Personal Travel Allowance applications.