CBN Starts Clearance of $10bn Forex Backlogs of Foreign Airlines, Others

The Central Bank of Nigeria (CBN), has started clearing over $10 billion foreign exchange backlogs of commercial banks and foreign airline operators.

The apex bank also assured the public that it has enough volume of banknotes to go around even in the approaching festive period, calling off allegations of cash in the banking sector.

The CBN claimed in reaction to reports of alleged scarcity of cash at banks, automated teller machines (ATMs), Points of Sale and Bureaux de Change (BDCs) in some major cities across the country.

The central bank in a statement said the seeming cash scarcity in some locations is due largely to high volume withdrawals from the CBN branches by Deposit Money Banks (DMBs) and panic withdrawals by customers from the ATMs.

There had been reported cases of panic withdrawals in parts of Nigeria over fears that the banknote could be scarce as was experienced in 2022 end of the year festivities, especially as the bank is yet to comment on continued use of the redesigned higher-denominations of the old currency notes.

The court had extended the use of the old banknotes till December 2023 to allow a better circulation of the new notes. The CBN is here to make its position known on the issue.

Director, Corporate Communications of the CBN, Isa AbdulMumin said in the statement that “While we note the concerns of Nigerians on the availability of cash for financial transactions, we wish to assure the public that there is sufficient stock of currency notes for economic activities in the country. The branches of the CBN across the country are also working to ensure the seamless circulation of cash in their respective states of operation.

“Members of the public are, therefore, advised to guard against panic withdrawals as there is sufficient stock to facilitate economic activities. Nigerians are also advised to embrace alternative modes of payment, which would reduce pressure on using physical cash.”

With an estimated backlog of over $10 billion, CBN said, it has started clearing outstanding foreign currency forwards owed to banks, with banking sources saying there was an initial payment of $1 billion.

Director, Corporate Communications of the CBN, Dr Isa Abdulmumin told Reuters on Thursday that ‘the CBN has started paying the foreign exchange backlogs to banks. So far, 14 banks have been paid.’

Reuters, quoting four banking sources, said, the banks were paid varying amounts totalling about $1 billion and that the payments would continue in the next few weeks. The CBN spokesperson had however not mentioned the amount or the name of the banks that were paid.

The central bank’s payments follow Finance Minister Wale Edun’s announcement that Nigeria was expecting $10 billion of inflows to improve foreign exchange market liquidity. It will come as a relief to local lenders, who have been struggling to meet demands from customers due to chronic dollar shortages in the country.

The Minister of Finance, Wale Edun, disclosed last week that the country would soon receive an inflow of $10 billion in foreign currency to mitigate the forex crisis.