The Central Bank of Nigeria (CBN) is making plans to clear the foreign exchange (FX) backlogs in the next one or two weeks, Folashodun Adebisi Shonubi, acting governor, CBN said. He disclosed this at a conference in Lagos on Monday.
FX backlogs, which is the unmet demand for forex by investors and exporters, is estimated at $10 billion and has resulted in huge losses by many firms, according to analysts.
“As a matter of fact, there’s a large amount of the obligations that the banks in Nigeria have already taken on. What happened was at maturity, they actually made the financing available for those who needed to use it, the importers.
“Then there are some customers who still have their obligations and are part of the restructure with the banks in Nigeria. To also clear that backlog is something we have been discussing for a while, and we expect that we will clear it in the next one or two weeks,” he said.
He said what that means, is that the obligation overhang that people keep on talking about will not be there.
“Today we still intervene in the market so it’s not as if it has affected our ability to make monies available to banks in the Nigerian foreign exchange market (NAFEX) but when you look at the volumes, I think again we overemphasise what the role and depth of the CBN intervention is.”
He said the CBN contributes less than 25 percent into the FX market and that the aim, 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.
“There’s so much more in foreign exchange that people don’t talk about, that have been made available through the banking system so that banks are selling to their customers. It doesn’t come to the central bank, it doesn’t appear as part of the demand that comes to us, and it is significant. It is almost three times what we as a Central Bank make available. So, the summary is we hope to clear the backlog. Maybe in the next two weeks, through different structures that are there,” he said.
Shonubi faulted a report about $7.5 billion debt to American bank, JP Morgan, saying “There is no outstanding $7 billion with JP Morgan in any form, it has been branded everywhere based on their opinion that was put on paper.