The Central Bank of Nigeria (CBN) has uncovered instances of infractions, gross abuses, and non-compliance with foreign exchange market regulations. The revelation was made by Mrs. Sidi Ali, the Acting Director of Communication at the CBN, in a statement released in Abuja on Wednesday.
This revelation follows the CBN’s decision six months ago to remove the rate cap on the exchange rate and implement measures aimed at unifying the exchange rate. However, this move has resulted in a significant depreciation of the naira, exacerbating the existing inflationary pressures.
As a consequence of the identified infractions, the CBN has expressed its commitment to take punitive measures against those responsible, collaborating with relevant agencies to enforce appropriate sanctions. The CBN has been facing forward contract obligations exceeding $7 billion to banks and firms, contributing to the challenges in the foreign exchange market.
To address the backlog of outstanding foreign exchange liabilities, the CBN has initiated payments totaling approximately $2 billion across various sectors, including manufacturing, aviation, and petroleum. The bank has also cleared the entire liability of 14 banks and commenced settlements with foreign airlines.
Mrs. Sidi Ali stated that an independent forensic review of the forex process has been commissioned by the CBN through a reputable firm. She affirmed that the payment of forex backlog for qualified transactions has already begun.
However, the review of forex transactions brought to light serious infractions, gross abuse, and significant non-compliance with market regulations. In response to these findings, the CBN has asserted its resolve to sanitize the financial services sector and foster trust among all market participants, both internal and external stakeholders in the Nigerian economy.
The statement by Mrs. Ali emphasized, “The CBN is resolved to sanitize the financial services sector and foster trust among all market participants, as well as internal and external stakeholders, in the Nigerian economy. Nevertheless, she said the CBN will continue to settle the legitimate foreign exchange backlog as it has consistently been doing in the last three months.”
Reports indicate that the CBN’s forward contract obligations to banks stand at $7 billion, reflecting the magnitude of the challenges in the foreign exchange market. The recent move by the CBN aligns with its ongoing efforts to settle valid forward transactions and alleviate the pressure on the country’s exchange rate.
It is anticipated that these initiatives by the CBN will not only address the identified infractions but also contribute to stabilizing the Naira against major world currencies and bolstering investor confidence in the Nigerian economy.
In a related development, the Economic and Financial Crimes Commission (EFCC) has undertaken investigations into alleged preferential allocations of forex to Dangote Group and 51 other companies. The anti-graft commission has requested documents from these firms, directing them to provide evidence supporting the allocation and utilization of foreign exchange over the last decade.
