The Central Bank of Nigeria, CBN, has commenced a re-validation exercise to ascertain complaints of manufacturers and importers over foreign exchange claims worth $2.4bn.
The CBN Governor, Olayemi Cardoso, disclosed this while speaking to the business community at a special summit dinner organised by the Nigerian Economic Summit Group, on Tuesday night in Abuja.
He said the bank has finalised its first stage of verification and is currently going through a second stage to authenticate claims by manufacturers.
This new development comes eight months after the apex bank claimed to have cleared fx forwards worth $7bn, effectively eliminating a legacy burden.
But the real sector under the auspices of the Manufacturers Association of Nigeria complained of the apex bank’s failure to clear unredeemed FX forward contracts incurred under the administration of the former governor, Godwin Emefiele.
The association in August said the continued failure to resolve the issues was piling pressure on industries, causing them to declare huge losses.
The MAN DG, Segun Kadir said, “There is still the issue of the unsettled $2.4bn FX Forwards contract that the CBN, for inexplicable reasons, is still holding.
“Most of our big industries are declaring losses and some of these losses are traceable to this issue of not honouring FX Forwards contracts.”
Although Cardoso at several fora had maintained that the bank had cleared all claims, the new announcement of cross-checking the claims was received with a round of applause from seated guests.
He said, “Our view is focused on managing inflation, and focus on stabilising prices, focus on foreign exchange management.
“In respect to the forwards, You know, at the time I spoke about this when I was going for my clearance at the Senate. All I knew was that there was a huge backlog, and there seemed to be a problem with the finances of the central bank.
“It was very clear to me that it was something that needed to be tackled immediately. And when I say it needed to be tackled, it’s giving confidence to international investors and others that as a central bank, we would meet our obligations. It was important to do so.
“We went through the process of verifying the claims, and we began to have a better understanding of the claims and the appropriateness of the claims.
“I know that as of now, there are still some which have been unverified. We are working on those. We are at a particular stage now where we have gone through stage one, and we are back to stage two to verify those claims as it is now.
“But more important and very important, we had to ensure that we could walk the talk because that clearly and truly is the way to build credibility. No point in saying you do one thing and not do it. You have to be transparent in the way you undertake your operations.”
Continuing, Cardoso explained that policy initiatives by the bank on the foreign exchange market have led to a diaspora remittance of $600m between January and September 2024.
He said this is from an annual remittance of $200m.
“With the limitations from other sources of foreign exchange, we took it upon ourselves to engage with the IMTOs. When I was in Washington for the spring meetings, I called the different IMTOs and let them feel it from different parts of the world. And we engaged them extensively and understood what the problems were.
“I would say that when we started, the volumes that were going through the remittances of policies were in the region of maybe about $200m and as at the end of last month, we were almost $600m, he stated.
Speaking further on his core mandate, Cardoso said taming inflation is key in stabilising the economy.
“Our goal continues to be that of stabilising our economy and stabilising the macroeconomic fundamentals,” he said.
“That continues to be our goal and we will not relent in ensuring that we are able to appropriately manage inflation in a direction that certainly serves the well-being of everyone
“So, we have a situation where, from our perspective, taming inflation is key.
Taming inflation is key because if you do not tame inflation, it has such a major throwback. It can deter investment.
“It significantly reduces purchasing power. And for those who are in productive engagements, they find that the people that they expect to provide their goods are not empowered to do so.
“So, it is so important for us to tame inflation and keep it under control
“It is critical. Sometimes we expect that the trade-off between the real sector, high interest rates, and, of course, the whole issue of inflation, will be a timing issue.
“And ultimately, we hope that as inflation begins to moderate, interest rates start to come down.
And, of course, it’s a lot easier for the productive sector to operate. So, that is really the hope and that’s the trend that we expect we will get to in the not-too-distant future.
“So, taming inflation is critical, getting the fundamentals right, and getting them working and being the president about diversification of the economy.”
The CBN governor also said the bank has made significant strides, nevertheless, “it is a journey”.
“I believe that the progress that we have made as a central bank of Nigeria, and as the entity that is giving the responsibility of managing, monitoring, policy of the country today, is certainly one that has taken the country in the right direction. I believe there is a lot more that needs to be done,” he added.
“The enormous amount that needs to be done. And I find one cannot help but be very, very vigilant. Because things are changing all the time.
“And we cannot afford to miss any critical piece, because it will have a major impact on the overall.
We have deliberately stayed away from intervention. And our view is that, as a central bank, our focus will continue to be to use orthodox monetary tools.
“We are in a situation where excessive interventions have gone on for several years and those have contributed in no small measure to the situation that the economy is in.”
On recapitalisation, Cardoso said the policy was necessary to revamp banks.
“I think it is more than clear to the banks that there was a need to increase capital to pay profits and ensure we have a strong banking system,” he said.
“We have not made it a draconian and difficult regulation.
“We are convinced that it is important to support the banks and from what I have seen so far, the road towards recapitalisation is going in the proper direction.”
He also said with this move, banks will be able to withstand any potential shocks.
