President Tinubu Commits to Clearing $3 Billion FX Contracts Backlog in Nigeria

President Bola Tinubu has vowed to clear a gaping foreign exchange future contracts backlog which has drained investor confidence in the country’s bold FX reforms.

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 which means there’s a backlog of around $3 billion, according to sources familiar with the matter.

The broader backlog, which includes unsettled foreign investors’ contracts, is estimated to be about $10 billion.

Worried by the growing backlog and with no assurance of when it will be cleared, correspondent banks are pulling the plugs on local Nigerian banks.