The Central Bank of Nigeria (CBN) had promised to clear over $10 billion in foreign exchange debts owed to Deposit Money Banks (DMBs) more than two weeks ago, but as of now, it has yet to fulfill that promise. Meanwhile, the naira continues to face pressure in both the parallel market and the Investor & Exporter forex window.
The former acting CBN Governor, Folashodun Shonubi, had announced on September 6, 2023, that the CBN had finalized negotiations on dollar debts with commercial banks and that all forex exchange backlogs would be cleared within one to two weeks. However, several top bank executives have confirmed that the CBN has not fulfilled this promise, putting banks in a difficult FX liquidity position and leading to the suspension of various FX transactions.
The situation has also exacerbated dollar scarcity in the parallel market, as customers turn to the black market to meet their forex needs.
According to a report by JPMorgan, the total amount of forward contract debt owed by the CBN is $6.84 billion, although other reports suggest it could be over $10 billion.
Manufacturers and operators in the economy fear further increases in the cost of goods and services due to the worsening naira value. They are calling for urgent intervention to prevent more hardship on Nigerians.
The President of the Manufacturers Association of Nigeria, Francis Meshioye, emphasized that the current exchange rate would lead to higher prices of products, making them less affordable for consumers. This could result in more factories shutting down.
The President of the Association of Bureaux De Change Operators of Nigeria, Dr. Aminu Gwadabe, highlighted the need for legislative support for the willing buyer and willing seller concept in the foreign exchange market, which would enhance liquidity and public confidence.
The new CBN Governor, Dr. Olayemi Cardoso, faces significant challenges as he takes office, including managing the ongoing forex crisis and restoring confidence in the market.
In summary, the delay in clearing foreign exchange debts by the CBN has created liquidity issues in the banking sector, put pressure on the naira, and raised concerns about rising costs for businesses and consumers in Nigeria.