Foreign air lies
Foreign airlines operating in the country have disputed the announcement by the Central Bank of Nigeria, CBN, that it has settled all…
Foreign airlines operating in the country have disputed the announcement by the Central Bank of Nigeria, CBN, that it has settled all outstanding backlogs of valid foreign exchange claims. The CBN had announced on Wednesday that it had finally settled all valid foreign exchange backlogs, fulfilling a key pledge by Governor Olayemi Cardoso to process inherited claims totalling US$7 billion. Hakama Sidi Ali, the regulator’s spokesperson, said that the CBN recently concluded the payment of $1.5 billion to settle obligations to bank customers, effectively settling the residual balance of the FX backlog. She also disclosed that independent auditors from Deloitte Consulting meticulously assessed these transactions, ensuring that only legitimate claims were honoured and invalid transactions were promptly referred to the relevant authorities for further scrutiny. However, in an interview with Leadership Newspaper, the president of the Association of Foreign Airlines and Representatives in Nigeria (AFARN), Kingsley Nwokoma, said that about $700 million belonging to foreign airlines was still trapped in the country and asked for transparency in the CBN’s dealings.
The news that the CBN had settled all valid foreign exchange backlogs caused the Naira to appreciate from $1/₦1,600 to $1/₦1,400 within 48 hours. There is also a sense on the street that many speculators of FX are looking to sell their USD holdings and take positions in high-yield Treasury Bills, indicating that the current CBN initiative to reduce demand from FX is yielding results. There has also been a noticeable FX inflow from foreign portfolio investors looking to take positions in high-yielding fixed-income instruments and equities. The coming months will determine whether the naira’s appreciation is sustainable or short-lived. We fear that, based on the reaction of foreign airlines, the latter would be the case. Settling obligations to bank customers and successfully eliminating the remaining FX backlog would position the CBN to keep its commitments and bolster trust in the financial system. Thus, they would need to, as a matter of urgency, take Mr Nwokoma’s advice and be transparent about their dealings, publishing who got what. Such a move would positively impact the stability and credibility of Nigeria’s financial sector. Overall, the announcement that they had cleared the backlog reflected a step in the right direction towards resolving financial challenges and enhancing trust in the banking system. Publicising it and removing all doubts would be a further step in that direction. Institutions like the CBN need to continue implementing transparent and accountable practices to maintain the integrity of financial operations.