The Central Bank of Nigeria (CBN) is working with commercial banks to clear $10 billion foreign exchange (forex) backlog within the next two weeks, according to a report
Acting Governor Folashodun Shonubi broke the news at a forum on Tuesday in Lagos, The Nation reported. He said the backlogs would be cleared through different structures within the forex market.
He said banks, which control 75 per cent of the forex transactions, will play significant role in seeing that the backlog are cleared.
The backlogs, estimated at about $10 billion, include dollar requests from manufacturers and importers purchasing raw material inputs from abroad, parents paying their children’s tuition fees abroad, Nigerians paying medical bills abroad, travellers sourcing Business Travel Allowances (BTAs) and Personal Travel Allowances (PTA), among others.
These requests were stalled for years due to dollar scarcity, drop in foreign direct investments (FDIs) and foreign portfolio investments (FPIs) inflows, drop in foreign reserves positions amongst other offshore investment opportunities.
Shonubi said the local banks have been working with the apex bank on various structures to clear it.
“As matter of fact, there is a large amount of the obligations that the banks in Nigeria have already taken on. So, what happened was that at maturity, they actually make the foreign exchange available for those who needed to use them like importers and what have you.
“There are some customers who still have their obligations and part of the restructuring with the banks in Nigeria, is also to clear that backlog. That is something we have been discussing for a while. I expect that we will do that, within the next one or two weeks.
“What that means, therefore, is that this obligation that people keep on talking about will not be left. Today, we still intervene in the market, so it is not as if it has affected our ability to make monies available to banks in the Investors and Exporters foreign exchange market,” Shonubi said.
He explained that considering the volume of forex interventions, role and the depth of the CBN intervention is overemphasised.
“When we look at the volumes, the Central Bank of Nigeria today contributes less than 25 per cent into the forex market. And the aim if you remember about a year and a half ago, was that the Central Bank did not want to be a regular player, but more of intervening to stabilise the rates and that is where we are going,” Shonubi said.
He added that a lot of forex transactions go on through the commercial banks without the CBN’s input.
