Victor Ezeja
AdminAs the naira continues its free fall exchanging N1200/$1 today in the parallel market owing to the floating of the currency mid-June, President Bola Tinubu has vowed to clear foreign exchange contracts backlog discouraging investor confidence.
Speaking at the ongoing Nigeria Economic Summit #NES29 in Abuja on Monday, the President asserted “We need to refloat this economy,” assuring that public-private partnerships and successful models from the past will be utilized to ensure a prosperous Nigeria for all.
While revealing Nigeria’s ambition to achieve a $1 trillion economy by 2026 and $3 trillion within this decade through sustainable and competitive growth, he said the federal government is seeking collaboration and support from industry leaders to realize this vision.
According to him: “The private sector is encouraged to bring their ideas, leadership, and capital to build a hopeful future. I am confident that by working closely with all of you in the private sector, financing our $3 trillion National Infrastructure Stock can be achieved in 10 years and not in 300 years.
“Building megacities in every geopolitical zone of the size and scale of Lagos must not take us another six decades. We can do it in one decade. A fully networked and connected Nigeria by rail, gas, fibre optics and road network can be constructed in less than 20 years. Establishing thriving Industrial zones in every part of Nigeria is possible before 2030,” he said.
To address the huge Forex backlog of about $10 billion owed to foreign investors by the Central Bank of Nigeria (CBN), Tinubu said, “As it relates to foreign exchange obligations of the government, all forward contracts that the government has entered will be honoured and a framework has been put in place to ensure that these obligations are met in due course.
“Consistent with our commitment to enshrining fairness and the rule of law in our country, this government will uphold the sanctity of every legitimate contract. I assure you we have a line of sight to the foreign exchange we need to refloat this economy. And we will get it,” the President added.
Recall that 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 the backlog of which reports put at around $3 billion. Foreign investors also have a substantial backlog of approximately $10 billion owed to them by the CBN. This impacts the confidence and trust of foreign investors in the Nigerian economy, potentially deterring future investments and harming economic growth.
Moreover, the shortage of foreign exchange liquidity resulting from this failure has forced Nigeria’s apex bank to suspend various transactions. These include payments for school fees and Personal Travel Allowance (PTA) applications, causing inconvenience and financial difficulties for individuals who rely on these services.
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