Breaking: CBN uncovers $2.4bn fraud in foreign exchange backlog

 

By Abimbola Tooki

Mr. Yemi Cardoso, governor of the Central Bank of Nigeria, has disclosed that the apex bank has discovered that of the roughly $7 billion foreign exchange backlog that is yet to be cleared by the federal government, ‘’about $2.4 billion had issues."

The central bank, according to Cardoso, would not honour non-compliant transactions.

The governor said on Monday that a forensic audit of $7 billion of overdue foreign exchange transactions the bank has been trying to clear had uncovered irregularities affecting $2.4 billion worth of the transactions.

Cardoso said in an interview on local channel Arise TV that the irregularities ranged from missing paperwork to non-existent entities and beneficiaries receiving unauthorised foreign exchange allocations.

Investigations by BusinessWorld revealed that unauthorized foreign exchange allocations to some powers that be in government and business circles have largely led to the crippling of Nigeria’s economy.

Nigerians have been groaning under steep rise in the prices of foodstuffs and other basic amenities. Two square meals have literally vanished from many homes, a development that has led to malnutrition of many children.

Africa's largest economy is experiencing crippling dollar shortages that have pushed its naira currency to record lows.

The audit, conducted by management consultants Deloitte, was aimed at identifying whether there were invalid transactions in the forex backlog, one factor behind the naira's slide.

So far, about $2.5 billion of the backlog across sectors including aviation, manufacturing and energy has been paid, and Cardoso said the remaining $2.2 billion would be cleared swiftly.

"Having $2.2 billion outstanding is different from $7 billion. I believe we're at the end of this road. We'll clear everything soon and move on," Cardoso said.

The CBN last week announced a limit on how much banks can hold in foreign currency, capping their net open positions at 20 per cenr of shareholders' funds for short positions and a zero limit for long positions.

It also ordered banks to immediately liquidate excess holdings as part of a series of measures to boost dollar liquidity.

The central bank now requires banks to have enough liquidity to cover maturing foreign exchange obligations, and lenders are also encouraged to have forex contingency funding arrangements with other institutions.

"Our focus has been to start looking very aggressively at the supply side of the chain," Cardoso said.

Under Cardoso the central bank has pledged to pursue a more conventional monetary policy, and the bank aims to bring inflation down to 21 per cent after hitting a 27-year high in December at 28.92 per cent