Nigeria’s Central Bank Settles Foreign Exchange Backlogs

The Central Bank of Nigeria (CBN) has revealed that it has settled all valid foreign exchange backlogs in various sectors of the economy.

The announcement -- made by the bank's Acting Director of Corporate Communications Hakama Sidi-Ali on Wednesday -- was a fulfillment of a pledge taken by the governor of CBN Olayemi Cardoso to clear an inherited backlog of $7 billion in outstanding liabilities.

As the backlogs were cleared, the local currency Naira's value appreciated in the market by N100. On Tuesday, the value of the Naira was N1, 590 while it appreciated to N1, 490/$1 on Wednesday.

Something similar was witnessed at the official Nigerian Autonomous Foreign Exchange Market, where the Naira concluded Wednesday at N1,492.61 against the dollar, marking an N67.96 increase from Tuesday's rate of N1,560.57.

Sidi-Ali explained that the apex bank recently completed a $1.5 billion payment to clear obligations to bank customers, effectively clearing the remaining balance of the FX backlog. She revealed that independent auditors from Deloitte Consulting carefully reviewed these transactions to guarantee that only valid claims were fulfilled.

"We made clearing the FX backlog a priority to restore credibility and confidence in the Nigerian economy," she said, Premium Times reported. It was important that we go through an independent and credible process that would determine the authenticity of those obligations."

"I can tell you that we have now cleared all genuine, verifiable transactions. This encumbrance to market confidence in the country's ability to meet its obligations is now totally behind us."

Furthermore, she also mentioned that a rise has been recorded in the nation's external reserves. As of March 7, the reserves reached $34.11 billion, marking the highest level in eight months.

Last month, CBN disclosed that there are $2.4 billion in invalid foreign overdue claims, which has created pressure on the local currency.

Cardoso revealed this information after an audit, noting that this knowledge was concealed for the last seven years. However, the audited accounts of the CBN went public last year and showed a $7 billion backlog of unmet dollars.

The World Bank last year recommended Nigeria to control inflation, improve stability of the FX market, sustain savings from the PMS subsidy reform, improve non-oil revenues and remove trade barriers.