The Central Bank of Nigeria (CBN) on Wednesday announced its plan to clear all the backlog of foreign exchange (FX) demand from manufacturers, businesses, importers, and exporters over the next two weeks.
This was even as the apex bank encouraged BDCs to adopt technology and move away from manual cash transactions to align with its electronic payment initiatives.
The Acting Governor of the CBN, Folashodun Shonubi, made the announcement during a media briefing in Lagos. Whilst revealing that the apex bank has been working with commercial banks to clear the backlog of forex demand, Shonubi mentioned that banks have taken up a significant portion of these obligations, and the goal was to clear the backlog within the next one to two weeks.
He said, “There are customers who still have their own obligations and part of the restructuring with the banks in Nigeria was to clear those backlogs. It is something that we have been discussing for a while and we expect that we will clear it between the next one or two weeks. What that means therefore is that this obligation that people keep talking about will not be there”.
Shonubi emphasised that despite the backlog clearance efforts, the CBN is still actively intervening in the foreign exchange market and making funds available to banks through the Nigerian Foreign Exchange Market (NFEM).
According to him, the CBN’s contribution to the FX market has decreased, accounting for less than 25 percent of the market’s volume. He stated that there is a substantial amount of foreign exchange available through the banking system, which is not facilitated by the CBN.
The Acting CBN Governor encouraged Bureau de Change (BDC) operators to embrace technology.
He stated that BDCs that are not tech-savvy may face challenges as the CBN promotes electronic payments, adding that the shift towards electronic transactions aims to reduce the reliance on cash in the system. Highlighting the importance of distinguishing between regulated and unregulated markets, Shonubi said the CBN aims to regulate and promote electronic payments within the BDC sector while discouraging cash-based transactions, especially for services outside the country.
He said, “BDCs that cannot go electronic, I think would soon be fading out of the system. This is because we do not believe that we should still be heavily into cash. People who need cash need it for something other than value transactions. How do you pay for a service outside the country carrying cash? This helps us to differentiate between what is a regulated market, which is the BDC as opposed to the ones which are not recognised or regulated by the Central Bank”.
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