Forex backlog audit reveals irregularities of $2.4 billion, says CBN

The Central Bank of Nigeria (CBN) disclosed on Monday that a forensic audit of the $7 billion overdue foreign exchange transactions, which the bank has been working to clear, has identified irregularities affecting $2.4 billion worth of transactions.

In an interview on Arise TV, CBN Governor Olayemi Cardoso stated that the irregularities ranged from missing paperwork to instances of non-existent entities and unauthorized beneficiaries receiving foreign exchange allocations.

Nigeria is grappling with severe dollar shortages that have led to a historic decline in the value of its currency, the naira.

The audit, conducted by management consultants Deloitte, aimed to identify invalid transactions contributing to the naira’s depreciation. Mr Cardoso was appointed last July, meaning the irregularities took place under the previous leadership at the bank.

Former governor of the bank, Godwin Emefiele, who was sacked in June, is facing corruption charges. Folashodun Shonubi, the bank’s director of operations under Mr Emefiele, administered the CBN briefly after Mr Emefiele’s removal.

Supply side of the chain

Mr Cardoso revealed, “We discovered that of the roughly $7 billion, about $2.4 billion had issues,” emphasizing that the central bank would not validate non-compliant transactions.

To date, approximately $2.5 billion of the backlog, covering sectors such as aviation, manufacturing, and energy, has been cleared, he said. Mr Cardoso assured that the remaining $2.2 billion would be swiftly addressed.

“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,” Mr Cardoso said.

Last week, the CBN introduced measures to enhance dollar liquidity, including limiting banks’ net open positions in foreign currency and ordering the immediate liquidation of excess holdings.

Banks are now required to ensure enough liquidity to cover maturing foreign exchange obligations, and they are encouraged to establish forex contingency funding arrangements with other institutions.

Mr Cardoso emphasized, “Our focus has been to start looking very aggressively at the supply side of the chain.”

Under Mr Cardoso’s leadership, the central bank says it is committed to adopting a more conventional monetary policy, aiming to reduce inflation to 21% after reaching a 27-year high of 28.92% in December.