THE Central Bank of Nigeria (CBN) said it had started the clearing of the foreign exchange (FX) backlog of commercial banks and airline operators.

The bank’s Director of Corporate Communications, Isa AbdulMumin, confirmed the development to The ICIR on Thursday, November 2.

AbdulMumin, however, did not respond to further questions put across to him.

The ICIR had asked AbdulMumin what percentage of the FX backlog was cleared, whether the fund was from the inflow the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, announced, and if not, he should state the source.

Edun had, at the Nigeria Economic Summit (NES) on Monday, October 23, said the Nigerian government was expecting $10 billion in foreign currency inflows in the coming weeks to ease liquidity in the FX market without disclosing the source of the fund.

“There is a line of sight on $10 billion worth of inflow of foreign exchange in a relatively near future, in weeks rather than months,” Edun said, adding that President Bola Tinubu had on Thursday, October 19, signed two executive orders to support the currency market.

The executive orders allow domestic issuance of instruments in foreign currency and all cash outside the banking system to be brought into the banks.

Meanwhile, Nigeria had faced an estimated FX backlog of $10 billion to settle the demands of foreign investors seeking to repatriate funds and airlines seeking to send money from ticket sales abroad.

This has worsened the shortfalls in the FX market, widening the gap between the official and black market rates and forcing many businesses and individuals to turn to the black market.

According to a BusinessDay report, the apex bank delivered over 75 per cent to 80 per cent of outstanding matured FX forwards in banks, and only international banks have been settled, which include Citi Bank, Standard Chartered, and Stanbic IBTC, adding that the backlog in 14 banks was cleared.

Tinubu had also, at the NES event, said his administration would honour every legitimate contract concerning the nation’s foreign exchange obligations.

The apex bank had breached many of its foreign currency forward contracts before now, the executive vice chairman of Highcap Securities Limited, David Adonri, noted.

“I am aware that CBN entered into several foreign currencies forward contracts with many counterparties to deliver hard currencies at maturity of the contracts. Many of those obligations were not settled at due dates,” he said.

Another expert who lauded the development said CBN and the Federal government should let Nigerians know where it sourced the funds.

The expert, who did not want his name mentioned, hoped the authorities were not borrowing the fund without announcing it.

According to the expert, the primary sources of funds to intervene in the market are the foreign reserves and the excess crude oil reserves, which CBN has significantly depleted.

“There were no details from the Minister of Finance. What we know for certain is that there is no Father Xmas out there to give Nigeria such an amount. Hence, the only source is by borrowing,” the expert stated, adding that the National Assembly should have approved such a fund.

CBN denies scarcity of currency notes in banks

The CBN has denied that cash is scarce at banks, automated teller machines (ATMs), points of sale (POS) and among bureaux de change (BDCs) in some major cities nationwide., following an alleged report.  

In a statement by AbdulMumin on Thursday, the apex bank, however, explained that the seeming cash scarcity in some locations was mainly due to high volume withdrawals from the CBN branches by Deposit Money Banks (DMBs)..

“While we note the concerns of Nigerians on the availability of cash for financial transactions, we wish to assure the public that there is sufficient stock of currency notes for economic activities in the country. The branches of the CBN across the country are also working to ensure the seamless circulation of cash in their respective states of operation.  

“Members of the public are, therefore, advised to guard against panic withdrawals as there is sufficient stock to facilitate economic activities. Nigerians are also advised to embrace alternative modes of payment, which would reduce pressure on using physical cash,” AbdulMumin said.