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•As companies groan over naira slump at parallel market
From Uche Usim, Abuja
President Bola Tinubu, on Monday, reiterated his pledge to clear the foreign exchange backlogs he inherited, as a way of resetting the finance ecosystem and attracting fleeing investors back to the country. His assurances came as forex scarcity bites harder, leading to further slump of the Naira at the parallel market, where it exchanged for N1,205 to a dollar in Abuja, on Monday.
Tinubu spoke on Monday at the opening of the 2023 Nigeria Economic Summit holding in Abuja.
The President said: “All foreign exchange future contracts will be honoured by this government.
“I assure you we have a line of sight to the foreign exchange we need to refloat this economy. And we will get it”.
Before the Tinubu administration came onboard, the Central Bank of Nigeria (CBN) sold forward contracts to several Nigerian businesses with an arrangement to buoy them with foreign exchange at an agreed price in future.
Riding on that, the banks opened Letters of Credit (LCs) to honour contracts, which importers used to buy goods from foreign suppliers. Sources, however, explained that the apex bank, since February, has been unable to settle the obligations estimated at $3 billion. A broader backlog, which includes unsettled foreign investors’ contracts, is estimated at about $10 billion.
These have muddied the waters just as the lingering forex scarcity has tossed several companies into the intensive care unit and crumbling foreign obligations.
Many are gradually cutting their operations in readiness to move to ther economies with better business environment.
Companies that took dollar loans are already gnashing their teeth as their losses swelled following the twin challenges of forex scarcity and Naira depreciation that have battered their operations. The multinationals are lamenting the impact of persistent dollar scarcity triggered by inadequate supply from key economic agents and the CBN.
