Tinubu urged to intervene in unresolved $2.4bn FX contracts

A businessman, Abdullahi Abiola, has asked the Central Bank of Nigeria to clear matured foreign exchange forward contracts to banks and manufacturers to avert the collapse of struggling businesses and attendant economic implications including unemployment.

He also urged President Bola Tinubu and Minister of Finance and Coordinating Minister of the Economy, Wale Edun, to intervene in and salvage manufacturers from the protracted situation and current losses.

Abiola, a printer whose business involved importing foreign printing materials, lamented that the apex bank’s inability to honour matured FX contracts for over one year since the start of Tinubu’s administration had placed him under severe interest rates as high as 35 per cent.

The businessman, in a statement, said the uncleared FX backlog has forced him to shut down some segments of his operations and downsize his workforce.

Interest rates paid to banks have eaten all his profits and threatened his capital. He said the situation has been compounded by unprecedented energy costs, which have quadrupled in the last year.

According to the Manufacturers Association of Nigeria and the Nigerian Association of Chambers of Commerce Industry Mines and Agriculture, 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.

MAN had said the CBN has not cleared $2.4bn worth of forward contracts, putting severe strain on manufacturers as commercial banks continue to charge dollar accounts along with other naira bank charges such as 35 per cent interest rate on the facilities that these companies have with their banks.

MAN described the situation as a “worrisome breach of contract” which has further exacerbated currency risk for businesses, leading to substantial financial losses and operational disruptions.

Abiola said businesses with substantial foreign exchange liabilities like his own are seriously challenged because of his company’s inability to fulfil its offshore obligations due to the CBN’s non-delivery of dollars.

Currently faced with acute credit and liquidity risks due to the unsettled forward contracts, which have strained their cash flow and jeopardised their overall financial stability.

He said the pathetic situation was avoidable if the Olayemi Cardoso administration of the CBN had promptly cleared the forwards to guarantee business stability, productivity, and job security in the country.