Businessman Abdullahi Abiola has called on the Central Bank of Nigeria (CBN) to urgently settle matured foreign exchange forward contracts with banks and manufacturers to prevent the collapse of struggling businesses and the associated economic consequences, including rising unemployment.
Abiola, a printer whose business relies on importing foreign printing materials, also appealed to President Bola Tinubu and the Minister of Finance, Wale Edun, to intervene and assist manufacturers in addressing the ongoing crisis and the resulting financial losses.
In a statement, Abiola lamented that the CBN’s failure to honor matured foreign exchange contracts for over a year, since the beginning of Tinubu’s administration, has left him burdened with interest rates as high as 35%. This has placed his business in a dire situation, forcing him to shut down parts of his operations and downsize his workforce.
He explained that the interest paid to banks has eroded all of his profits and jeopardized his capital. The situation has been made worse by soaring energy costs, which have quadrupled in the past year.
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The Manufacturers Association of Nigeria (MAN) and the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) have reported that many businesses took loans from commercial banks to fund their working capital and secure clean lines of credit, based on forward contracts allocated by the CBN. However, MAN revealed that the CBN has not cleared $2.4 billion worth of these forward contracts, putting immense strain on manufacturers. As a result, commercial banks continue to charge high interest rates, up to 35%, on dollar-denominated accounts, in addition to other bank fees in naira.
MAN has described the CBN’s failure to honor these contracts as a “worrisome breach of contract,” which has compounded currency risks for businesses, resulting in significant financial losses and operational disruptions.
Abiola further emphasized that businesses like his, with substantial foreign exchange liabilities, are facing severe challenges due to the inability to meet offshore obligations because the CBN has not delivered the required foreign currency. This has led to critical liquidity issues and heightened credit risks, undermining the financial stability of many companies.
He concluded that the current crisis could have been avoided if the Olayemi Cardoso-led CBN administration had promptly cleared the forward contracts, ensuring business stability, productivity, and job security in the country.
