Abdullahi Abiola, a Nigerian businessman whose business involved importing foreign printing materials, lamented that the apex bank’s inability to honor matured FX contracts for over one year since the start of President Bola Tinubu’s administration has placed him under severe interest rates as high as 35 percent.
The businessman, in a statement, said the uncleared FX backlog has forced him to shut down some segments of his operations and downsize his workforce.
“Interest rates paid to banks have eaten all my profits and threatened my capital. The situation has been compounded by unprecedented energy costs, which have quadrupled in the last year,” he said.
Abdullahi has pleaded to the Central Bank of Nigeria (CBN) to clear matured FX forward contracts to banks and manufacturers to avert the collapse of struggling businesses and attendant economic implications including unemployment.
He also urged President Bola Tinubu and Wale Edun, minister of Finance and Coordinating Minister of the Economy to intervene in and salvage manufacturers from the protracted situation and current losses.
Segun Ajayi-Kadir, the director general of the Manufacturers Association of Nigeria (MAN) has said the CBN is yet to cleared $2.4 billion worth of forward contracts, putting severe strain on manufacturers as commercial banks continue to charge dollar accounts along with other Naira bank charges such as 35 percent interest rate on the facilities that these companies have with their banks.
According to the Manufacturers Association of Nigeria (MAN) and the Nigerian Association of Chambers of Commerce Industry Mines and Agriculture (NACCIMA), many businesses borrowed money from deposit money banks as working capital to open clean lines of credit for their companies based on forward contracts allocated by the CBN.
MAN described the situation as a “worrisome breach of contract” which has further exacerbated currency risk for businesses, leading to substantial financial losses and operational disruptions.
“Businesses with substantial foreign exchange liabilities like my own are seriously challenged because of my company’s inability to fulfil the offshore obligations due to the CBN’s non-delivery of dollars,” Abdullahi said.
He concluded that he is currently faced with acute credit and liquidity risks due to the unsettled forward contracts, which have strained his cash flow and jeopardised overall financial stability.
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