The Central Bank of Nigeria has identified that $2.4 billion out of the reported $7 billion outstanding foreign exchange liabilities of the federal government are not valid for settlement.
- According to Deloitte's report, up to $2.4 billion of the reported backlog consists of false claims.
- Cardoso said that CBN has settled about $2.3 billion of the FX backlog.
- Cardoso acknowledged there's about $2.2 billion left to be settled.
Central bank governor Yemi Cardoso revealed this information on Monday in an interview with Arise TV, stressing that these invalid claims have exerted pressure on the naira and unsettled the currency market.
After being concealed from public knowledge for seven years, the audited accounts of the CBN were made public last year. During this disclosure, auditors revealed a $7 billion backlog of unmet dollar demand from investors and currency users.
The CBN engaged Deloitte to investigate the forex claims for an accurate assessment, Mr. Cardoso stated in the interview.
According to Deloitte's report, up to $2.4 billion of the reported backlog consists of false claims, with claimants unable to provide import documents in some instances, he added.
What the CBN governor said:
“We had had reasons to believe we needed to take a harder look at these obligations. So we contracted Deloitte management consultants to do forensics of all these obligations and to actually tell us what was valid and what was not,”
“The result that came out of this was startling in a great respect; it was quite startling. We discovered that of the roughly $7 billion, about $2.4 had issues, which we believed had no business being there – and the infractions from that range from so many things,"
"For example, not having valid import documents and in some cases, even entities that did not exist and in some cases, beneficiaries and account parties that asked for FX and got more than they asked for. And those who didn’t even ask for any and got. So, there was a whole load of infractions there, which I said amounted to about $2.4 billion out of the $7 billion headline figure.”
When asked what the apex bank was going to do about those contentious transactions, Cardoso simply said, “We are not paying, if you don’t qualify. “
Cardoso said that CBN has settled about $2.3 billion and that applies to the airlines and a whole load of different entities spread throughout the economy.
He acknowledged there's about $2.2 billion left to be settled, and expressed confidence that they will be addressed soon.
In the past few weeks, the apex bank has given a series of directives to address the FX crisis in Africa's largest economy and prevent further decline in the value of the naira.
The bank released a circular addressing suspected cases of excessive foreign currency speculation and hoarding from Nigerian banks. It issued an order instructing banks to offload their excess dollar reserves by February 1, 2024.
It also prohibited banks and fintechs from conducting international money transfers, a move viewed as a strategic step to tackle Nigeria's FX crisis.
