CBN Injects $1 Billion To Clear FX Forwards

Abuja, Nigeria– The Central Bank of Nigeria (CBN) has delivered over 75 to 80 percent of outstanding matured FX forwards to banks, the development follows an initial payment of $1 billion, aimed at clearing the long-overdue obligations.

CBN spokesperson, Isah Abdulmumin, disclosed this on Thursday, marking a positive step towards addressing the persistent challenges related to foreign exchange liquidity and the financial stability of Nigerian banks.

“The CBN has started paying the FX backlogs to banks. So far, 14 banks have been paid,” Isah Abdulmumin told Reuters but declined to give the amount or name the banks.

According to BusinessDay, a source said only international banks have been settled, which include Citi Bank, Standard Chartered and Stanbic IBTC.

While a few of the lenders were paid the entire amount owed, others got as much as 80% of the backlog, sources told Vanguard.

Nigeria has nearly $7 billion in forex forwards that have matured, which corporations bought from local banks. Banks then repaid foreign credit lines with their own funds when the central bank did not pay out.

The Central Bank’s payments follow Finance Minister Wale Edun’s Oct. 23 announcement that Nigeria was expecting $10 billion of inflows to improve foreign exchange market liquidity.

It will come as a relief to local lenders, who have been struggling to meet demands from customers due to chronic dollar shortages in Africa’s largest economy.

New Central Bank Governor Yemi Cardoso has said clearing the backlog was a priority but gave no timeline for how long it would take.