Nigeria's Central Bank Settles Nearly $2 billion worth of FX Backlog

Nigeria's Central Bank has settled nearly $2 billion of outstanding foreign exchange liabilities including does due to foreign airlines.

Why is this important: The recently elected government is keen to create an enabling environment and has taken bold steps to grow the economy through tough decisions like abolishing the fuel subsidy and unifying the foreign exchange markets, but inherited long overdue liabilities to foreign airlines. According to a CBN official, about $61.64 million has been disbursed to the airlines through various banks which brings up to $2 billion in the total backlog cleared in three months.

• Nigeria has nearly $12 billion in forex forwards according to Goldman Sachs which has matured as the country continues its reform momentum of exchange-rate liberalisation and monetary policy improvements.
• The Central Bank of Nigeria (CBN) has been working actively to pay the outstanding liabilities to boost the foreign exchange market and was granted $7 billion by the World Bank.

The bottom line: President Tinubu's government seems to be taking a business-friendly approach to governance, dealing with business-hindering policies, revisiting the country's monetary policy and appointing an experienced economic team to drive its agenda which is based on less borrowing and increased revenue generation through infrastructure spending. Though the economic challenge is huge the government is taking the right steps to position the country to be an investor-friendly destination for both the local and international community.