$2.4bn Forex Backlog: Group Seeks Presidency, NASS Intervention

The Social Integrity Network (SINET) has urged President Ahmed Bola Tinubu and the leadership of the National Assembly to  intervene in the issue regarding the alleged classification of a $2.4 billion forex trading  as fraud by the Central Bank of Nigeria (CBN).

The group urged both the presidency and the legislators to prevail upon the CBN governor, Olayemi Cardoso to honour the forward contracts that were genuinely backed up with proper compliant documents for utilisation against each Letters of Credit (LCs) opened by the commercial banks using the forwards as a hedge.

The group said the declaration by the CBN governor, Olayemi Cardoso, that $2.4 billion forex demand was fraudulent was incorrect.

In a statement on Monday, SINET national coordinator, Ibrahim Issah, recalled that “On February 5, 2024, the governor of CBN made this declaration in both his interactions with Senate committees and his interview on national television, following the engagement of Deloitte Management Consultant to conduct a forensic investigation where he claimed that the said amount was uncovered.

Issah disclosed that “On the contrary, we wish to unequivocally state that these claims lack merit and do not take into account the consequences they will have on businesses, public perception, or the economy of our cherished nation and its implication on forex both at home and abroad.”

He said further, “Without sentiment, the claim is complete falsehood and unacceptable as he, the CBN governor, failed to consider its economic implications. It is pertinent to state that genuine businessmen and women across the country, borrowed Funds from commercial banks, some with interest rates as high as 30 per cent to secure forex from the CBN through their respective commercial banks since CBN does not sell the dollars to individuals directly.

“The same funds have been deposited with CBN for the past one and half years for forwards allocated for which the Apex Bank is now claiming were fraudulent transactions. May we remind Mr. Governor that while the CBN allocated the forwards after collecting the naira for each forward allocated, the commercial banks used these same forward contracts as a hedge and issued Letters of Credit (LCs) to their various customers against their offshore credit lines and also as a sovereign guarantee to their offshore banks which stand unpaid till today as a result of the failure of CBN to honour the various forward contracts.

“May we also remind our CBN Governor that as a result of their failure to honour these contracts, the outstanding foreign loans continue to accrue interest (post-negotiation charges), which the commercial Banks are passing to their customers: the same customers you say do not have a genuine claim.”

The statement further stressed that, “The public would like to ask Mr. Governor the following questions: What will happen to the foreign bank that is expecting their payment to be paid back? What will happen to the businessmen and women who had borrowed Naira from commercial Banks and paid the same into the CBN account for the purchase of forex for over eighteen months? Who will bear the interest charged on borrowed funds locally? Who will bear the charges running against the offshore lines used in establishing Letters of Credit? What will happen to the businesses? What will happen to the employees that are dependent on the survival of the businesses that CBN is trying to kill?

“We call upon the senate president and, in fact, the president and Commander In-Chief of the Federal Republic of Nigeria to call the CBN governor to order and reconsider honouring the forward contracts that are genuinely backed up with proper compliant documents for utilisation against each Letters of Credit (LCs) opened by the commercial banks using the forwards as a hedge.

“Let us state categorically that the CBN is killing businesses by cancelling the forward contracts that were sold to them about 18 months ago at the rate of N450/dollar and now selling the same funds to the commercial banks and directing the bank to sell the money at the rate of 1,500/dollar to the same businesses who initially had a forward contract at the rate of N450/dollar.

“May we also remind Mr. Governor, that failure to honour these forward contracts is taking commercial banks longer time to clean the offshore lines already used for establishing Letters of Credit against which shipments have been done and payment made to LC beneficiaries by the offshore banks. The delays of the commercial banks to settle their Forex obligations to their offshore banks is making our country’s risk to be very high.

“Lastly, the public will like to call on the coordinating minister for the economy, Wale Edun to engage the CBN regarding this issue of undelivered forward contracts because at present in Nigeria, almost 60 per cent of companies in the manufacturing sector have been closed due to the volatility of Forex in Nigeria in order to avoid the other 40 per cent from also closing down.

“This will go a long way to help the few remaining manufacturing companies still in operation in Nigeria and also encourage the new investors that the president and commander-in-chief of the federal republic is trying to woo investors to Nigeria.”