$7bn FX: OPS Threatens To Sue Banks Over Rejected Forex Requests
Some businesses under the aegis of the Organised Private Sector of Nigeria are considering taking legal action against some commercial banks for not honouring forex requests which have lingered over an extended period.
The OPSN also called for a comprehensive audit of the Central Bank of Nigeria’s forex backlog payments. This follows a recent claim by the apex bank that all valid forex backlogs have been cleared.
Members of the OPS, insisted that the claim by the apex bank that it had settled all forex backlogs was not entirely true.
Some of the member associations, speaking in separate interviews, faulted the process through which the CBN conducted the settlement of the backlogs. They argued that the process was not transparent, neither was it carried out in the interest of full disclosure.
The threat of litigation comes despite a recent stakeholder meeting comprising NACCIMA, MAN, the affected banks and customers which was convened by the Minister of Industry Trade and Investment at the Bank of Industry in Lagos on March 21, 2024.
The CBN, had on Wednesday announced that it has successfully cleared all valid foreign exchange backlogs, effectively eliminating a legacy burden.
The announcement was made by the bank’s Acting Director of Corporate Communications, Mrs Sidi Ali, in a statement made available to journalists on Wednesday.
The CBN followed this month by reporting a significant increase in external reserves, rising by $993m to $34.11bn as of March 7, 2024, the highest level in eight months.
Notably, the CBN recently completed the payment of $1.5bn, resolving obligations to bank customers and thereby clearing the residual balance of the FX backlog.
The statement partly read, “The Central Bank of Nigeria has announced that all valid foreign exchange backlogs have now been settled, fulfilling a key pledge of the CBN Governor, Mr Olayemi Cardoso, to process an inherited backlog of $7bn in claims.
“Clearance of the foreign exchange transactions backlog is part of the overall strategy detailed in last month’s Monetary Policy Committee meeting to stabilise the exchange rate and thereby curb imported inflation, spurring confidence in the banking system and the economy.
“Cardoso used the MPC meeting and a subsequent conference call with foreign portfolio investors to set expectations for sustained increases in Nigeria’s foreign currency reserves and improved liquidity in the foreign exchange market.”
Cardoso, speaking at a recent meeting, had underscored the importance of clearing the FX backlog to restore credibility and confidence in the Nigerian economy.
The clearance of the foreign exchange transactions backlog aligns with the strategy outlined during last month’s Monetary Policy Committee meeting.
In January, the Central Bank of Nigeria said it released $500m to various sectors in its determination to address the backlog of verified foreign exchange transactions.
This came barely a week after the apex bank paid approximately $2bn to settle outstanding commitments across various sectors.
Reacting to the apex bank’s claim, the National Vice President of the Nigerian Association of Small Scale Industrialists, Segun Kuti-George said the claim by the CBN on clearing all valid forex backlog was not entirely correct.
According to him, many businesses still have funds trapped at the banks without any communication from the CBN regarding what constitutes a valid forex request and those deemed invalid.
Kuti-George further argued that the claim by the CBN that some of the forex requests were invalid was ‘propaganda’ and that some of the affected businesses are contemplating taking legal action against the banks in order to force the CBN’s intervention in the matter.
Kuti-George said, “Some of the requests have been cleared, but there are others that they are saying were illegal and did not meet their criteria, but the importers are not aware of the reason why the requests have been rejected. Their monies are still with the bank, and they are groaning.
“The ones that they did not approve. Let us know why it was not approved. We don’t know, and our monies are still hanging. The deposits are still hanging. So, they are crying. In fact, some of them are saying that they are thinking of taking the banks to court, and the bank in return, will pull the CBN in.
“What makes the requests invalid? Have they told the banks? So that they can get back to the owners? No. the banks themselves are unaware of what makes them invalid and the owners still have the funds with the banks, expecting them to pay foreign exchange. One of them told me he has over a N100m hanging.”
In the same vein, the National President of the National Association of Chambers of Commerce, Industry, Mines, and Agriculture, Dele Oye called on the CBN and the Ministry of Trade and Industry to craft an urgent solution to the unmet forex requests by some members of the OPSN to avert what appears to be a looming legal action on the part of the affected businesses.
Oye stated that several NACCIMA member companies and other private sector operators have challenged the completeness of the forex clearance.
He also noted that many of NACCIMA’s members have reported that despite the CBN’s commitment to provide foreign exchange, their funds in Naira have been retained for extended periods, some for over a year.
He expressed regret that this had occurred without adequate communication from their respective banks or the CBN, leaving their business operations in a state of uncertainty.
Oye also recalled that in February, NACCIMA as part of the Organised Private Sector of Nigeria, sought the intervention of the Minister of Finance to address these issues, emphasising the need for transparency and expedited resolution.
He added that NACCIMA, alongside NASSI, NASME and other associations, raised these concerns with the Minister of Industry, Trade, and Investment during a courtesy visit that same month.
