THE Central Bank of Nigeria (CBN) says it has cleared all valid foreign exchange backlog as overseas remittances push foreign reserves to $34.11 billion – the highest in 8 months.
In a statement signed by CBN’s Acting Director of Corporate Communications, Ms Hakama Sidi Ali, and sent to Economy Post on Wednesday night, the apex bank said it had fulfilled a key pledge of the CBN Governor, Mr. Olayemi Cardoso, to process an inherited backlog of $7 billion in claims.
The statement noted that the CBN recently concluded the payment of $1.5 billion to settle obligations to bank customers, effectively settling the residual balance of the FX backlog.
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It disclosed that “independent auditors from Deloitte Consulting meticulously assessed these transactions, ensuring that only legitimate claims were honoured. Any invalid transactions were promptly referred to the relevant authorities for further scrutiny.”
The statement explained that a recent meeting, Mr Cardoso, had declared that clearing the FX backlog was the CBN’s a priority to restore credibility and confidence in the Nigerian economy.
The statement further noted that clearance of the foreign exchange transactions backlog was part of the overall strategy detailed in last month’s Monetary Policy Committee meeting to stabilise the exchange rate and curb imported inflation, spurring confidence in the banking system and the economy.
“Cardoso used the MPC meeting and a subsequent conference call with foreign portfolio investors to set expectations for sustained increases in Nigeria’s foreign currency reserves and improved liquidity in the foreign exchange market,” it said.
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It added that external reserves had risen by $993 million to $34.11 billion as of March 7, 2024, which was the highest level in eight months.
“The month-on-month increase was driven by a marked advance in remittance payments by Nigerians overseas, as well as higher purchases of local assets, including government debt securities, by foreign investors.”
Naira strengthens
Naira strengthened to N1,400 to the dollar in the parallel market on Wednesday, March 20, closing at N1,492 at the NAFEX official market. This forced market speculators to sell off their forex in anticipation of a further drop in prices.
The CBN has settled forex backlog owed airlines and businesses since the appointment of its governor, Mr Cardoso, on September 15, 2023.
Economy Post had reported that Bureau De Change (BDC) operators recently halted currency sales in Lagos and Abuja as the Economic and Financial Crimes Commission (EFCC) intensified its raids, forcing foreign currencies to weaken.
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The EFCC commenced raid on BDCs in mid-February 2024 to halt naira slide. The anti-corruption agency had arrested several BDC operators for economic sabotage, saying that they are responsible for the continued depreciation of the naira in both parallel and FMDQ (official) markets.
But currency experts say the strengthening of the naira is just a temporary relief, urging the Nigerian government to begin to think long-term rather than devise a knee-jerk response to the naira depreciation.
An economist, Mr Ebun Oduluje, said: “The fact is that we are not earning enough dollars because we are not producing and exporting a lot of products. Our major source of foreign exchange earnings is crude oil, which, for years, is refined abroad. We need to turn things around and ensure that manufactured products from Nigeria get to various global markets. However, that will require solving the issues of poor power supply, low infrastructure, difficult raw materials sourcing, high cost of credit, and port delays,” he said.
