The Central Bank of Nigeria (CBN) has 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.
It also revealed that, it has uncovered infractions, gross abuses, and non-compliance with foreign exchange (FX) market regulations.
Consequently, the apex bank vowed it would punish those responsible for these abuses in collaboration with relevant agencies.
The CBN Acting Director of Communication, Mrs. Sidi Ali, disclosed in a statement in Abuja on Wednesday.
Recall that the development came about six months after the CBN removed the rate cap on the exchange rate and announced other measures aimed at unifying the exchange rate.
On the contrary, the move by the CBN has led to a huge depreciation of the naira, a situation that has also worsened inflation.
But the CBN spokeswoman on Wednesday in the statement said in its bid to clear the backlog of outstanding foreign exchange liabilities, the apex bank has paid approximately $2bn across various sectors, including manufacturing, aviation, and petroleum.
According to her, the bank had also cleared up the entire liability of 14 banks and started settlements with foreign airlines and commissioned an independent forensic review of the process by a reputable firm as she affirmed that payment of forex backlog for qualified transactions had commenced.
Ali, however, pointed out that the review of the forex transactions revealed gross abuses.
The statement read in parts, “The review revealed grave infractions, gross abuse, and significant non-compliance with market regulations, and appropriate sanctions will be enforced in collaboration with relevant agencies.
“The CBN is resolved to sanitise 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.”
Earlier, the bank disclosed that it had paid $2bn to clear part of its backlog of matured foreign exchange obligations to Deposit Money Banks. It also disclosed that it paid $61.64m to foreign airlines.
At the time, Ali said, “These payments signify the CBN’s ongoing efforts to settle all remaining valid forward transactions, to alleviate the current pressure on the country’s exchange rate.
“It is anticipated that this initiative by the CBN should provide a considerable boost to the Naira hug against other major world currencies and further increase investor confidence in the Nigeria economy.”
Meanwhile, the Bureau De Change operators have raised the alarm that due to the depreciation in the value of the naira, some Nigerians are keeping their savings in the United States dollar.
National President, Association of Bureau De Change Operators of Nigeria, Aminu Gwadabe, stated that there was a need for the forex market to be liquid.
Gwadabe noted that the $2.2bn released by the African Import-Export Bank was not enough to stimulate the market.
“For now, it’s a difficult situation which is also creating panic in the market because the value of the naira is eroding and because of that, a lot of people prefer to keep their savings in dollars,” he disclosed.
Speaking on the $2.2bn facility, Gwadabe said;
“The $2.2bn Afrexim bank crude prepayment facility is a welcome development but I don’t think it’s enough to stimulate the market considering the situation because if we put $2.2bn into the market, we have been seeing demand in the I&E window alone ranging from $150m to $250m daily so, in 10 days, the $2.2billion will be exhausted. Speculators will speculate and we will run it out between 10 to 15 days.”
