>
Akinwande Soji-Ojo
As the naira continues its free fall at the parallel market, President Bola Tinubu has vowed to clear backlog of foreign exchange (fx) contracts discouraging investors’ confidence.
Tjnubu, who spoke at the 29th summit of the Nigeria Economic Summit Group (NESG) in Abuja, on Monday, also assured that the country will honour all future foreign exchange (fx) 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 leaves the country with a backlog of around $3 billion, according to reports.
The broader backlog, which includes unsettled foreign investors’ contracts, is estimated to be around $10 billion.
The apex bank’s failure to clear the dollar backlog has put the banks in a very tight forex liquidity position and has forced them to suspend several transactions including school fees and Personal Travel Allowance applications.