Muda Yusuf urges CBN to let firms prove $2.4b in unresolved FX deals

An economist, Muda Yusuf, has asked the Central Bank of Nigeria (CBN) to invite companies that have been affected by the $2.4bn unresolved matured foreign exchange forward contracts.

According to the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), it is only fair for the apex bank to allow the companies to come forward with documentary evidence to prove their eligibility for the obligations or otherwise.

Yusuf, a former Director General of the Lagos Chamber of Commerce and Industry (LCCI), in a recent interview, said the affected companies should be given room to offer explanations to convince those who conducted the verification exercise.

He said, “I think it is only fair for the CBN to look into their complaints because initially, what the CBN said was that there was a verification exercise that was done before the conclusion that the forwards that were cleared were the ones that were properly verified and that those that were not cleared, according to the CBN, were not properly verified.

“But the argument is that if there was any issue with those that were not cleared, those companies were not invited to defend themselves or to offer further explanations or shed light so that they can convince those who are undertaking the verification exercise.

“So, to that extent, we can argue that they (the CBN) have not been fair to the companies whose outstanding obligations were not paid.

“In the spirit of fairness, the Central Bank needs to invite those companies, let them come forward with documents to convince or otherwise the Central Bank or any other verification authority or committee that they have set up to justify their claims of these obligations because so far, according to these companies, nobody has even invited them to provide documents that validate or invalidate their claims.

It is only fair that they are given that opportunity.

“If they have that opportunity, I am sure it may not be all of them that will be cleared, but not all of them will be denied as it has been the case now.

“In the interest of equity and fairness, if they have issues with their claims, they should invite them to defend their claims. That is the only fair thing to do.”

In February 2024, CBN chief Yemi Cardoso said of the roughly $7 billion FX forward contract, about $2.4 billion had issues like not having valid import documents.

The Manufacturers Association of Nigeria and the Nigerian Association of Chambers of Commerce Industry Mines and Agriculture (NACCIMA) described the non-clearance of the $2.4bn worth of forward contracts as a breach of contract, which has further exacerbated currency risk for businesses, leading to substantial financial losses and operational disruptions.

MAN and NACCIMA said the non-payment has continued to put a severe strain on manufacturers as commercial banks continue to charge dollar accounts along with other naira bank charges, such as 35 percent interest rate on the facilities that these companies have with their banks.

The trade pressure groups had said many businesses borrowed money from deposit money banks as working capital to open clean lines of credit for their companies based on forward contracts allocated by the CBN.

Many businesspersons have continued to lament the apex bank’s inability to honour matured FX contracts for over about two years since the Bola Tinubu administration got in the saddle.

They had also urged Tinubu and the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, to intervene in and salvage manufacturers from the protracted situation and current losses and guarantee business stability, productivity, and job security in the country.

In December 2024, The Minister of State for Industry, Owan Enoh, promised to engage Cardoso over the $2.4bn foreign exchange forward contracts but his efforts have not yielded significant results.