The Central Bank of Nigeria (CBN) is reportedly collaborating with commercial banks to clear the nation’s $10 billion foreign exchange backlog within the next two weeks.

The move comes amid the foreign exchange crisis that has seen Nigeria default on many of its international financial obligations, particularly the repatriation of revenues for multinationals operating in the country.

The FX obligations have piled up over time, reaching an estimated $10 billion and compounding the challenge of attracting Foreign Direct Investment (FDI) and Portfolio Direct Investment (PDI).

The central bank’s move to clear the backlog was reportedly disclosed by the acting governor, Folashodun Shonubi. He shared this update at a forum held on Tuesday in Lagos, during a discussion about the ongoing issues in the foreign exchange market.

According to him, the clearance of these backlogs would be accomplished through various mechanisms within the forex market. He said that banks, which have been responsible for 75% of forex transactions, will play crucial roles in ensuring the successful clearance of the backlog.

“As a matter of fact, there is a large amount of the obligations that the banks in Nigeria have already taken on. So, what happened was that at maturity, they made the foreign exchange available for those who needed to use them like importers and what have you.

“There are some customers who still have their obligations and part of the restructuring with the banks in Nigeria, is also to clear that backlog. That is something we have been discussing for a while. I expect that we will do that, within the next one or two weeks.

“What that means, therefore, is that this obligation that people keep on talking about will not be left. Today, we still intervene in the market, so it is not as if it has affected our ability to make monies available to banks in the Investors and Exporters foreign exchange market,” Shonubi said.

Nigeria’s unmet FX demand has created chaos in its business ecosystem, leaving a huge vacuum that needs to be urgently filled with significant dollar liquidity.
Last year, Emirates Airlines suspended its operation in Nigeria due to its failure to repatriate nearly $90 million of its revenue. The fund is part of millions of dollars belonging to multinationals trapped in the country due to dollar scarcity.

The $10 billion backlog originates from unfulfilled foreign exchange demands from various sectors, including investors and exporters, manufacturers, importers procuring raw materials from overseas, parents funding their children’s tuition fees abroad, Nigerians covering medical expenses abroad, and travelers obtaining Business Travel Allowances (BTAs) and Personal Travel Allowances (PTA) since 2015.

In June, the central bank announced a move to eliminate multiple exchange rates by removing control pegs around the dollar. The decision has seen the naira plunge below N920 per dollar in the parallel market, and around N744 in the Investor & Exporter window now known as the Nigerian Foreign Exchange Market (NFEM).

The apex bank has failed to effect a convergence since then, despite new policies targeting the unification of exchange rates. This backdrop has been attributed to FX illiquidity at the banks, forcing people in need of dollars to the parallel market and thereby widening the exchange rate gap between the two FX sources.

Shonubi pointed out that the CBN’s contribution to the FX market is less than 25%, and he emphasized that the significance and extent of the apex bank’s intervention in the market are sometimes overstated, especially when considering the volume of forex interventions.

“When we look at the volumes, the Central Bank of Nigeria today contributes less than 25% into the forex market. And the aim if you remember 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 stabilize the rates and that is where we are going,’’ he said.

The CBN had earlier accused banks of diverting FX inflow from diaspora remittances to the parallel market, compounding the illiquidity in the I & E window.

Shonubi did not give details of how the CBN will achieve its aim to clear the $10 billion backlog in two weeks but disclosed that the banks have times three, access to more FX than the CBN.

“There is so much more foreign exchange that people don’t talk about, that is being made available through the banking system and 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.’’

Analysts say the move, if successful, will significantly boost naira’s performance in the FX market.

Former Vice President Atiku Abubakar has reacted to the judgment of the Presidential Election Petition Tribunal (PEPT), which threw his suit as well as those of others challenging the outcome of the February 25 presidential polls, out.

In a press briefing on Thursday, Atiku, who was declared the 1st runner-up by the Independent National Electoral Commission (INEC), said the court judgment failed to restore confidence in our dreams of free and fair elections devoid of human manipulations.

The PEPT quashed all the charges against President Bola Tinubu, upholding his victory. However, a large section of Nigerians have decried the judgment – calling it a miscarriage of justice.

Atiku said although he still has respect for the judiciary, the judgment is unacceptable. He said he has asked his lawyers to activate [his] constitutionally guaranteed rights of appeal to the higher court, which, in the instance, is the Supreme Court.

“It is my conviction that the electoral process in Nigeria should be devoid of untidy manipulations and that the outcome of every election should be a perfect reflection of the wishes of the electorate,” he said.

Read his full statement below:

Good afternoon, Gentlemen of the Press.

I am here today to give my official reaction to the judgment delivered yesterday by the Presidential Election Petition Court on the 2023 presidential election.

As you already know, I approached the court following the declaration by INEC that the APC and its candidate are the winners of the February 25, Presidential Election.

My decision to go to court is anchored in my belief that the court is the sanctuary of justice. The journey of my political career, as you know, holds so much to the courage and fearless decisions of our judiciary.

Indeed, I am no stranger to legal battles, and I can say that I have a fair idea of how the court system works. All through my career as a politician, I have been a fighter, and I must say that I have found the judiciary as a worthy pillar to rest on in the pursuit of justice.

The last presidential election in our country and the way it was managed by the electoral umpire, the Independent National Electoral Commission, leaves behind unenviable precedents, which I believe the courts have a duty to redress. Our gains in ensuring transparent elections through the deployment of technology was heavily compromised by INEC in the way it managed the last presidential election, and I am afraid that the judgment of the court as rendered by the Presidential Election Petition Tribunal yesterday, failed to restore confidence in our dreams of free and fair elections devoid of human manipulations.

Like I did say at the beginning of this legal battle when I instructed my lawyers to file my petition challenging the outcome of the presidential election, my ultimate goal in this pursuit is to ensure that democracy is further strengthened through the principles and processes of fair hearing.

Gentlemen of the press, I take great pains to tell you that the decision of the court of first instance on this matter utterly falls far short of that expectation. I am therefore here to tell you that, though the judgment of the court yesterday is respected, it is a judgment that I refuse to accept. I refuse to accept the judgment because I believe that it is bereft of substantial justice. However, the disappointment in the verdict of the court can never destroy my confidence in the judiciary.

Consequently, I have asked my lawyers to activate my constitutionally guaranteed rights of appeal to the higher court, which, in the instance, is the Supreme Court. It is my conviction that the electoral process in Nigeria should be devoid of untidy manipulations and that the outcome of every election should be a perfect reflection of the wishes of the electorate. I believe that such is the only way through which our democracy can have a manifest expression of its true meaning. Whether I prevail in this quest or not, the record of my effort in ensuring an order of credible elections in Nigeria shall remain for the future generations to evaluate.

On this note, I urge all my supporters to remain steadfast. I urge them to take solace in an immortal lesson I learned from my leader and mentor, the late Shehu Yar’Adua, that losing a battle is less important than losing the war. We might have lost a battle yesterday, but the war is well ahead of us. And I believe that with our hopes in God, we shall win the war of restoring confidence in our electoral system.

Distinguished ladies and gentlemen of the Press, I thank you for your attention.

Atiku Abubakar, GCON
Waziri Adamawa
Vice President of Nigeria (1999 – 2007)
2023 PDP Presidential Candidate