CBN Vows Sanctions After Discovering ‘Gross Violations’ of FX Market Regulations

The Central Bank of Nigeria (CBN), on Wednesday, said it found grave infractions, gross abuse and significant non-compliance with market regulations by operators in the foreign exchange segment.

The revelation followed a forensic review conducted by a reputable independent firm which was commissioned by the apex bank.

The central bank said it would mete out appropriate sanctions against the violators in collaboration with relevant agencies.

CBN acting Director, Corporate Communications Department, Mrs. Hakama Sidi Ali, which disclosed this in a statement, did not reveal the infractions nor the institutions or personalities involved. 

In addition, the statement also did not reveal the identity of the “reputable independent firm” which was engaged by the CBN to carry out the task.

The CBN, however, said it would continue to settle all legitimate foreign exchange backlogs going forward.

The bank maintained that it has paid about $2 billion across various sectors, including manufacturing, aviation, and petroleum, in a determined resolve to clear the outstanding foreign exchange liabilities.

The central bank emphasised that it has consistently defrayed legitimate FX backlogs in the last three months, noting that it has cleared the entire liability of 14 banks.

Ali, maintained that the central bank remained committed to sanitising the financial services sector as well as fostering trust among all market participants, including internal and external stakeholders.

The CBN recently announced that it had disbursed about $61.64 million to foreign airlines through various Deposit Money Banks (DMBs).

The apex bank also said it redeemed outstanding forward liabilities amounting to about $2 billion in the past three months.

The bank pointed out that the payment reaffirmed its commitment to eliminating the backlog of pending matured foreign exchange in banks as well as dousing pressure on the exchange rate.

Sidi explained that the initiative was part of the apex bank’s efforts to decrease its outstanding liability to the airlines.

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

According to her, these payments consolidates 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.

By the latest intervention, the central bank hopes to provide a considerable boost to the Naira against other major world currencies as well as increase investor confidence in the economy.

The federal government recently received $2.25 billion out of the $3.3 billion foreign exchange (FX) facility from the African Export–Import Bank (Afreximbank).

The long-awaited credit support seeks to ameliorate the acute FX shortage in the country which had constrained economic activities and doused investors’ confidence.

Earlier in December, President Bola Tinubu had assured Nigerians of the commitment by his administration to resolve the FX backlogs through injection of funds into the market.

It is estimated that there is between $7 billion to $10 billion in existing FX backlogs which must be cleared to boost investors’ confidence, some of whom have already exited the country due to the persistent liquidity constraints bedeviling the economy.

Meanwhile, Afreximbank acting as the Mandated Lead Arranger along with United Bank for Africa (UBA) as Local Arranger, closed on a $3.3 billion liquidity support for Nigeria through a structured financing arrangement with NNPC Limited.

James Emejo

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