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Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), has disclosed ongoing investigations by security agencies, including the Economic and Financial Crimes Commission (EFCC), into questionable foreign exchange (FX) allocations and forward contracts amounting to $2.4 billion. This development comes on the heels of an audit conducted on the $7 billion debt inherited by the Cardoso-led CBN from the previous administration.
The audit, spearheaded by global firm Deloitte, highlighted significant irregularities in the FX transactions, leading to the involvement of law enforcement agencies. Speaking after the 294th meeting of the Monetary Policy Committee in Abuja, Cardoso emphasized the focus of security agencies on unraveling issues surrounding FX transactions that did not meet regulatory standards. The Deloitte report underscored numerous infractions, including the allocation of millions of dollars to fictitious entities and the provision of FX without corresponding naira values.
Cardoso clarified the CBN’s stance on these irregularities, citing their refusal to validate transactions lacking proper documentation and legality. While acknowledging the possibility of clarifications altering the current stance, he reaffirmed the commitment of law enforcement agencies to scrutinize these transactions.
Despite recent announcements of the complete clearance of valid FX backlogs by the CBN, concerns have arisen within the organized private sector regarding rejected bids and transparency in the settlement process.
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Threats of legal action against commercial banks have surfaced, prompting calls for urgent solutions.
Cardoso assured stakeholders of an open and transparent market to address outstanding contractual obligations, while also reiterating the CBN’s diligence in verifying and settling recognized backlogs.
Regarding enforcement in the cryptocurrency market, Cardoso clarified the role of the CBN and reiterated the bank’s stance on direct interventions, emphasizing collaboration with capable entities for interventions.
In a bid to strengthen the financial system against potential risks, the CBN directed deposit money banks to expedite actions on increasing their capital base.
This directive aligns with plans announced by Cardoso in 2023 for a fresh round of banking recapitalization to support Nigeria’s economic growth objectives.
The proposed increase in the capital base comes nearly two decades after the CBN’s 2004 banking reform and aims to bolster the capacity to support Nigeria’s drive towards becoming a $1 trillion economy by 2026.
As the CBN continues to monitor developments in the banking sector, Cardoso emphasized the importance of compliance with regulatory guidelines and urged commercial banks to accelerate recapitalization efforts to fortify the financial system against potential risks.
