The Central Bank Governor Olayemi Cardoso has announced that the forensic verification of the $7 billion FX backlogs is nearing completion.
Speaking at the launch of the Nigeria Foreign Exchange (FX) Code in Abuja on Tuesday, Cardoso emphasized the importance of this milestone in restoring transparency and trust to the market.
The Governor disclosed that the verification process, which uncovered unethical and illegal practices in FX transactions, is now in its final stages.
The FX backlogs stem from legacy issues during a period of multiple exchange rates and systemic abuses that eroded public confidence.
He said, “We must not forget where we are coming from. The era of multiple exchange rates, which created privileges for a select few at the expense of most Nigerians, severely undermined market integrity.
“As an example, the $7 billion of FX backlogs that has taken over 12 months to verify has led to the discovery of multiple unethical and even illegal practices that we should not be proud of as a nation. The forensic verification process is now near complete, and final settlements will be processed accordingly.”
Cardoso also highlighted the negative consequences of past practices, including inflation, currency depreciation, and the erosion of public confidence in the system.
He assured stakeholders that such distortions would no longer be tolerated under the FX Code, which mandates strict adherence to ethical principles.
He affirmed that the reforms implemented by the Central Bank of Nigeria (CBN), including unifying exchange rate windows and recalibrating monetary policy tools, were aimed at addressing these structural issues. He reassured stakeholders that the CBN is committed to preventing a recurrence of these distortions.
FX code launch: A new era for market integrity
The launch of the Nigeria Foreign Exchange (FX) Code represents a transformative step for the country’s FX market. Built on six foundational principles—Ethics, Governance, Execution, Information Sharing, Risk Management and Compliance, and Confirmation and Settlement Processes—the FX Code is designed to align Nigeria’s market with global best practices while addressing local challenges.
- Cardoso called on industry leaders to embed its principles into their organizational cultures, stressing that violations will attract swift penalties.
- The governor also credited recent reforms, such as the introduction of the Electronic Foreign Exchange Matching System (EFEMS) in December 2024, with driving progress. The EFEMS has not only enhanced market transparency but also contributed to the naira’s significant appreciation and the growth of external reserves.
- As part of the FX market reforms, the CBN introduced the Electronic Foreign Exchange Matching System (EFEMS) in December 2024, a move that has already yielded significant results. The naira appreciated from N1,663.90 to N1,536.72 within weeks of the EFEMS rollout. Additionally, Nigeria’s external reserves grew by 12.74%, reaching $40.68 billion by the end of 2024, reflecting the effectiveness of these reforms.
The Governor also highlighted the launch of the FX Code as a pivotal moment in fostering ethical conduct, transparency, and good governance in the FX market.
What you should know
- The CBN governor, Yemi Cardoso, in February 2024, disclosed that about $2.4 billion foreign exchange backlog is not valid for settlement.
- Cardoso clarified that out of the initially reported $7 billion FX liabilities of the Federal Government, about $2.4 billion were identified as invalid following a forensic audit by Deloitte Management Consultant.
- The audit’s findings showed various infractions, including non-existent entities and unauthorized FX allocations, making these liabilities invalid.
