The Central Bank of Nigeria (CBN) has announced plans to settle foreign currency (Forex) backlog commitments in the next two weeks, which may give Nigerian firms, from manufacturers to importers, who have been waiting in line for dollars, cause to heave a sigh of relief.
At a news conference in Lagos, acting CBN Governor Adebisi Shonubi stated that the central bank has taken concrete efforts and is collaborating with local banks on various structures to speed up activity and ensure that FX backlogs are resolved within the next two weeks.
This would improve liquidity in the Nigeria international Exchange Market (NIFEX) window, encourage offshore participation, and increase confidence among international investors in Africa’s largest economy.
Analysts have stated that, especially if the forex supply stays low and existing backlogs are not cleared, the unification of all official Forex windows alone is unlikely to be adequate to unify all Forex rates in the economy and reduce/eliminate participation in the parallel market.
Shonubi stated that “On the backlog, the local banks have been working with the CBN on various structures to clear it , as a matter of fact, there is a large amount of the obligations that the banks in Nigeria have already taken up.
“So what happened was that at maturity, they actually made the forex available for those who needed to use it like the importers. There are some customers who still have their own obligations and part of the restructuring with the banks in Nigeria is to also clear that backlog.”
“It is something we have been discussing for a while. Today we still intervene in the market, it is not as if it has affected our ability to make monies available to banks in the NIFEX market but when we look at volumes, the CBN today contribute less than 25 per cent into the forex market because the CBN do not want to be a regular player but more of intervening to stabilise the rate and that is where we are going,” he stated.
He added that the amount of foreign exchange that is currently accessible with banks is extremely large and nearly three times what is already in the CBN’s coffers.
Additionally, Shonubi added that operators of Bureau De’ Change (BDCs) who refuse to go electronic would gradually be phased out of the system, noting that the system would then not be highly cash driven.
He claimed that the measure would make it easier to distinguish between the markets that the CBN regulates, which are represented by the BDCs, and those that it does not.
He claimed that the CBN would crack down on businesses that work with foreign organizations to smuggle dollars into the nation.
“There are quite a number of players out there that have been bringing in money and selling in less an official ways, those, who rather than bring in money through the normal system pass it through them and they will sell to Nigerian companies rather than doing the proper thing, they can expect to hear from us shortly,” he concluded.
