Not all $7bn foreign exchange claims are valid, says Cardoso

The Governor, Central Bank of Nigeria (CBN), Mr. Yemi Cardoso on Monday revealed that not all $7billion foreign exchange claims are valid, stressing that the apex bank is investigating $2.4billion.

Speaking in an interview with Arise Television, Cardoso revealed that the CBN has contracted Deloitte Management Consultant to do a forensic of all these obligations and to disclose what was valid and what was not.

According to him, “Of course, we committed to ensuring that we would pay all valid transactions.  The result that came out of this was startling in a great respect; it was quite startling.

“We discovered that of the roughly $7billion, about $2.4billion had issues, which we believed had no business being there – and the infractions from that range from so many things.

“For example, not having valid import documents and in some cases, even entities that did not exist in some cases, beneficiaries and account parties that asked for FX and got more than they asked for. And those who didn’t even ask for and got.

“So, there was a whole load of infractions there, which I said amounted to about $2.4billion out of the $7billion headline figure.”

The CBN, according to him used to have foreign exchange shortages arising from certain distortions and that itself has created this situation where there has huge volatility in the market.

“We have looked at it over the past few months and come up with certain policies focused on creating an environment where liquidity comes back to the market and where we can see a more vibrant market than we had before.

“It is ultimately, I see a situation where people who require for in exchange don’t have to know anybody in the bank- in either the central bank or the commercial bank.

“A system is open and transparent, creates an environment for distortions to go away and thereby those who want to bring in foreign exchange and those who want to demand it, can do so, open bases willing buyer willing seller basis and therefore, the market becomes more active and the price is eventually discovered at a level that makes sense.”

He reiterated that the CBN does not have any plan to convert $30 billion in domiciliary accounts into Naira.

According to him, “As the governor of the central bank, I can tell you that nothing could be further in the truth. The reforms that you have seen in the past months, which have obviously culminated in the naira exchange, becoming a little less volatile, and ultimately it will be stable, have had to embrace market reforms and a situation where there’s free entry and free exit.

“Attacking domiciliary accounts goes against the grain of that philosophy.  We’re talking of liberalizing the markets and encouraging Foreign Portfolio Investors, foreign direct investors to come in and invest.

“During something like attacking the domiciliary accounts balances goes against the grain of that philosophy. And we certainly wouldn’t do anything like that.

“So, I want to assure you that there’s no truth as at no point in time has that ever come up for discussion because we are very clear that that does not fall into the overall strategy and focus that we have as a central bank.”