(Bloomberg) — Nigerian producers say they’re being “harassed” by lenders over excellent ahead international trade contracts with the central financial institution.
The contracts are a legacy of the West African nation’s previous fixed-currency regime, which was relaxed in 2023, and the Manufacturers Association of Nigeria mentioned members have confronted penalties together with frozen accounts over the deadlock.
Banks are inflicting “unwholesome treatments,” the Lagos-based group mentioned in a press release. “Our members have reported significant unwarranted complexities and undue high-handedness by the banks.”
The Bank Directors Association of Nigeria didn’t reply to requests for remark.
The overhang stems from a longstanding observe by the Nigerian Central Bank to ration scarce {dollars} to the home economic system, whereas pegging the naira at an artificially inflated stage towards the US forex.
The coverage was deserted after President Bola Tinubu got here to energy two years in the past, however the greenback backlog has taken time to pay down, contributing to the volatility of the native unit which has misplaced about 70% of its worth towards the dollar.
The downside stems from the way in which the system labored.
Nigerian corporations bid for {dollars} through ahead contracts through the industrial lenders, who obtained the US forex from the central financial institution in trade for naira. The course of is reversed when the contract ends. But the CBN hasn’t provided the {dollars} and industrial lenders now need the businesses to seek out the {dollars} elsewhere.
MAN mentioned in August its members had been ready for the central financial institution to settle $2.4 billion of overdue contracts. The CBN, which in March introduced it had cleared a backlog of $7 billion, initially disputed the claims, however later mentioned it might examine and decide on benefit.
“We reiterate our call on the Central Bank of Nigeria to speed up the long overdue redemption of the unsettled forex forward, ” MAN mentioned. “Our members should not be harassed.”
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#Nigerian #Manufacturers #Harassed #Contracts #Lobby
Nigerian producers, ahead international trade contracts, Central Bank of Nigeria, fixed-currency regime, greenback backlog
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