Tinubu vows to clear FX contract backlog
…announces date for students Loan scheme
Barbara Bako, Abuja
Nigerian president Bola Tinubu has vowed to clear foreign exchange contracts backlog that discourage investors investor’s confidence in the country.
Speaking at the ongoing Nigeria Economic Summit NES29 on Monday in Abuja, the president also stated that Nigeria will honour all future Foreign exchange contracts.
“All foreign exchange future contracts will be honoured by this government,” Tinubu said at the ongoing Nigerian Economic Summit Group (NESG) conference in Abuja.
“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.
Earlier, 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 means there’s a backlog of around $3 billion, according to sources familiar with the matter.
Some bankers say the CBN’s failure to clear the dollar backlog has put them in a very tight FX liquidity position and has forced them to suspend several transactions including school fees and Personal Travel Allowance applications.
That has piled pressure on the embattled naira which has crossed the N1000/$ mark in the parallel market and could well be on its way to N2000/$.
The official rate has also collapsed to around N1000/$ on the back of the CBN’s newfound tolerance for the naira to weaken some more after a 40 percent plunge in June as well as continued demand for scarce dollars.
The Nigerian president also declared that the Students Loans Scheme begins January 2024.
According to Tinubu, the collaboration of all stakeholders, especially the private sector, stressed the need to immediately initiate a sustainable credit scheme that would aid an effective anti-corruption campaign.
“By January 2024, the new Students Loan Programme must commence. To the future of our children and students we’re saying no more strikes.
“There must be consumer credit, scheme will have to come to effect as soon as possible. I thank my team and my colleagues to build this programme, develop it now.
“We cannot talk about anti-corruption when you have to look for cash to buy a car, when there’s no mortgage for homeownership,” he said.
