The House of Representatives has mandated its Committee on Small and Medium Size Enterprises (SMEs) to holistically investigate the cancellation of $2.4 billion worth of forward contracts sold to manufacturers by the Central Bank of Nigeria (CBN).
Recently, CBN had announced the invalidation of approximately $2.4 billion worth of forward contracts sold to manufacturers. According to the apex bank, the decision was informed by the discovery that the affected businesses failed to fulfill certain conditions.
However, the House while adopting a motion of urgent public importance, sponsored by Hon. Zakaria Dauda Nyampa, Hon. Ojema Ojetu and Hon. Obed Shehu at the plenary on Wednesday, specifically mandated its Committee to invite the affected manufacturing companies alongside the Central Bank Governor, Olayemi Cardoso, to examine their documents with the view to identify genuine companies with legitimate transactions.
Moving the motion, Hon. Nyampa noted that the invalidated forward contracts were originally entered into about a year ago between various Nigerian manufacturing companies and the CBN to hedge against currency fluctuations and risks associated with exchange rates.
According to him, having entered into the agreements, affected companies’ bank accounts debited in Naira equivalents and letters of credits issued by the participating commercial banks, the CBN decided to dishonour the contractual obligations and cancelled the transactions one year thereafter.
He expressed concerns that the cancellation of forward contracts was coming at a time of worsening national economic challenges such as galloping inflation, unemployment, increased poverty level and hardships.
He expressed worry that if sustained, the cancellation of the said transactions will cause the widespread collapse of small and medium companies and the exit of large corporations from Nigeria with all the attendant consequences thereof.
Following the adoption of the motion, the House gave the committee three weeks the Standing Committee to carry out the investigation and report back for further legislative action.
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