Adedapo Adesanya
By Adedapo Adesanya
Nigeria has paid nearly $2 billion in outstanding foreign exchange forwards in the last three months in a bid to clear a backlog of Dollars.
This was disclosed by Mrs Hakama Sadi Ali, the acting spokesperson of the Central Bank of Nigeria (CBN) in a statement late on Sunday.
Nigeria, which is Africa’s biggest economy, has over $6 billion in forex forwards that have matured, but the country has not been able to fulfil the obligations and this has caused a major concern for investors.
Despite recent efforts, forex shortages continue to weaken the Naira, which hit a low of N1,035 after the market resumed the new year last week.
The CBN has promised to pay up to boost confidence in the foreign exchange market.
“In the past three months, the CBN has also redeemed outstanding forward liabilities amounting to almost USD 2 billion,” the statement read in part.
“This underscores the Bank’s commitment to the resolution of pending obligations and a functional foreign exchange market,” it added.
Nigeria’s foreign currency shortages have been worsened by declining oil production, which is hampered by oil theft, underinvestment, and structural challenges.
Oil, while contributing just 5 per cent to the country’s GDP, accounts for more than 80 per cent of Dollar inflows.
President Bola Tinubu has promised to boost foreign currency inflows into Nigeria by attracting new investment, ramping up oil production and reforming the foreign exchange market.
The Governor of the CBN, Mr Olawale Cardoso has already begun rolling back some of the policies instituted by former governor, Mr Godwin Emefiele.
He said his administration will adopt an inflation-targeting policy.
Mr Cardoso also ended all direct interventionist programmes, which he said blurred the lines with monetary policy, and lifted an eight-year ban on 43 previously banned items from getting FX from official channels.
“We will be using inflation-targeting and we will ensure that the use of monetary policy cascades down and has an impact,” he said at a bankers’ dinner late last year.
Meanwhile, market analysts say the Nigerian government still needed to remove remaining import restrictions, despite lifting the forex ban on the 43 items, improving infrastructure and pursuing clear and consistent trade policies.
