Nigeria Central Bank Pays Nearly $2bn towards FX Backlog

Nigeria’s central bank has paid nearly $2 billion in outstanding foreign exchange forwards in the last three months in a bid to clear a backlog of dollars, a spokesperson has said, but forex shortages continue to hobble the country’s naira currency.

Africa’s biggest economy has nearly $7 billion in forex forwards that have matured, a major concern for investors, but the Central Bank of Nigeria (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,” acting spokesperson Hakama Sadi Ali said in a statement late on Sunday.

“This underscores the Bank’s commitment to the resolution of pending obligations and a functional foreign exchange market.”

Nigeria’s foreign currency shortages have been worsened by declining oil production, which is the country’s largest export, accounting for more than 90% of dollar inflows.

Ali said the CBN had recently paid $61.64 million to foreign airlines, who sold tickets in the local naira currency but have not been able to get their money out of the country.

Foreign airlines were owed more than $700 million at the end of November.

“These payments signify the CBN’s ongoing efforts to settle all remaining valid forward transactions, with the aim of alleviating the current pressure on the country’s exchange rate,” Ali said.

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.