Can the CBN clear Nigeria’s FX backlog?
Key questions this article answers:
- Nigeria’s acting Central Bank governor announced the bank was working towards clearing an estimated $9.7 billion in unmet FX demands in two weeks. What are the FX funding sources available to the apex bank?
- With just four days before the CBN's deadline, what are the implications of not fulfilling this promise?
On Tuesday, 5th September, the acting head of Nigeria’s apex bank, Folashodun Shonubi, announced that the Central Bank of Nigeria (CBN) was working with commercial banks to clear the massive backlog of Nigeria’s foreign exchange (FX) demands within two weeks.
This is coming on the heels of bold steps taken by President Bola Tinubu to remove fuel subsidies and liberalise Nigeria's FX market. We (Stears) had emphasised that while the steps taken by the President were positive as they freed up constrained government finances, the gains witnessed as a reaction to these policies will only be shortlived without a complementing boost in FX supply and a deliberate effort to clear up the existing backlog.
Naturally, this CBN announcement should have sparked some investor optimism as they’ve had funds trapped in Africa’s largest economy since its FX woes began in 2019.
But with just four days to the 19th of September
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