CBN To Resume Payment As Forensic Auditors Complete Verification Of $7bn FX Backlog

The Central Bank of Nigeria Governor, Olayemi Cardoso, on Wednesday, announced that the Federal Government will resume the payment of the verified portion of the outstanding $7bn foreign exchange.

The payment would be made after a successful verification exercise by forensic auditors.

Cardoso said this at the launch of Nigeria’s Regulatory Policy Framework organised by the Presidential Enabling Business Environment Council.

He explained that the apex bank management is optimistic that the clearance of the $7bn backlog would ease off the bottlenecks associated with repatriation of funds by businesses, multinationals and foreign investors.

According to the CBN governor, the outstanding forex clearance took far longer than they earlier anticipated.

He said, “In addressing foreign exchange liquidity constraint, decisive steps have been taken to clear outstanding $7bn forex backlog to ensure that businesses, multinationals, corporations and foreign investors can repatriate funds seamlessly

“This initiative has restored confidence among market participants and reinforced Nigeria’s commitment to honouring financial obligations in a timely and efficient manner. Talking about the $7bn backlog, we have cleared the verified claims.

“We also looked at the unverified ones, and I believe that we are at the final stages of separating what qualifies as fully verified, and we will surely be paying out those money that have been verified by the forensic auditors. It is unfortunate, to be honest, that it has taken so long.

“But the truth of the matter is that there were a lot of practices that went on that really should never have happened in the first place. That said, we are going to ensure that we do what we need to do to strengthen our market and create a better trust in what you investors naturally desire and deserve.”

Cardoso’s revelation ks coming barely a week after the Central Bank of Nigeria introduced a new Foreign Exchange (FX) Code aimed at restoring transparency, accountability and trust in the FX market, while addressing systemic abuses and unethical practices that have hindered the sector’s efficiency.

Cardoso had explained that the FX Code sets clear and enforceable standards to address past malpractices and prevent a recurrence of systemic abuses that have undermined Nigeria’s financial ecosystem.

Cardoso named several challenges that had plagued the foreign exchange market in the past, including the era of multiple exchange rates and unethical practices that led to a $7bn FX backlog and assured stakeholders that the forensic verification process of these backlogs is nearing completion, with final settlements to follow.

He said that the FX Code is structured around six core principles, namely: Ethics, Governance, Execution, Information Sharing, Risk Management and Compliance, and Confirmation and Settlement Process, which align with global standards while addressing Nigeria’s unique challenges.

The CBN boss further warned that violations of the FX Code would not be tolerated, while urging market participants, including bank board chairs, managing directors, and compliance officers, to adopt the principles of the FX Code within their organisations.

“The era of multiple exchange rates, which created privileges for a select few at the expense of most Nigerians, severely undermined market integrity. As an example, the $7bn of FX backlogs that has taken over 12 months to verify has led to the discovery of multiple unethical and even illegal practices that we should not be proud of as a nation. The forensic verification process is now near complete, and final settlements will be processed accordingly.

“Similarly, the period of unprecedented ways-and-means financing inflicted significant damage on our economy, contributing to inflation, currency depreciation, and eroded public confidence.

“These practices must never return. The FX Code is a firm rejection of such distortions and an equally firm commitment to a future defined by fairness, trust, and market-driven principles.

“Let us be clear: the system itself played a key role in the challenges of the past. Unethical behaviours and systemic abuses – whether by those with privileged access or by complicit participants – eroded public trust and harmed our economy. We will not tolerate any attempts to revert to those practices. Any individual or institution that violates the FX Code will face swift and decisive sanctions.

“Our journey towards market reform is already yielding results. The year 2024 was marked by structural reforms which sought to return the naira to a freely determined market price and ease volatility as several distortions were removed from the market.

“Reforms including the discontinuation of quasi-fiscal interventions, unifying the exchange rate windows, clearing a backlog of foreign exchange commitments, and recalibrating monetary policy tools were all necessary to redirect the course of our economy, restore order and credibility to our FX market, and refocus the CBN on its core mandates.

The apex bank had said that participants in the foreign exchange market are required to submit compliance reports regarding their adherence to the Nigeria FX Code by January 31, 2025.

This directive aims to enhance ethical practices, governance and transparency within the market.

“Market Participants will be required to conduct a self-assessment and submit to the CBN a report on the institution’s level of compliance with the FX Code by January 31, 2025.

“All Market Participants will thereafter be required to submit to CBN a detailed compliance implementation plan that is approved and signed by its Board along with the extracts of the Board meeting.”

“Following the initial deadline of January 31, market participants will be required to file quarterly compliance reports with the Financial Markets Department of the Central Bank.

“These reports are expected to be submitted within 14 days after the end of each calendar quarter, with the first set due by March 31, 2025”, the apex bank said.

CBN To Resume Payment As Forensic Auditors Complete Verification Of $7bn FX Backlog is first published on The Whistler Newspaper