As the naira continues its free fall at the parallel market, President Bola Tinubu has vowed to clear foreign exchange contracts backlog discouraging investors’ confidence.
Speaking at the ongoing Nigeria Economic Summit #NES29 in Abuja on Monday, the president also assured that Nigeria will honour all future Foreign exchange contracts.
“All foreign exchange future contracts will be honoured by this government. I assure you we have a line of sight to the foreign exchange we need to refloat this economy. And we will get it,” Tinubu said.
Recall that the Central Bank of Nigeria (CBN) sold what is called forward contracts to several Nigerian businesses with the promise of dollars at an agreed price in future.
The banks opened Letters of Credit (LCs) on the back of the forward contracts, which were then used to buy goods from foreign suppliers.
The CBN has, however, not settled the contracts since February 2023 which means there’s a backlog of around $3 billion, according to sources familiar with the matter.
The broader backlog, which includes unsettled foreign investors’ contracts, is estimated to be about $10 billion.
The CBN’s failure to clear the dollar backlog has put them in a very tight FX liquidity position and has forced them to suspend several transactions including school fees and Personal Travel Allowance applications.