The total debt owned by Nigerian commercial banks to their foreign counterparts has risen to about N788 billion ($4 billion), according to banking industry reports.
This was disclosed by a top executive of a commercial bank, who spoke under condition of anonymity, to the Punch saying, “Nigerian banks currently owe a combined sum of about $4bn in outstanding settlements for credit lines extended to them by foreign banks.
“The debts have mounted this far because Nigerian companies that imported goods from overseas could not purchase dollars from the CBN’s official window to pay the local lenders, which will in turn credit the accounts of the foreign banks,” he added.
The cumulative debt has arisen from the apex bank, Central Bank of Nigeria (CBN)’s restrictive policy on foreign exchange. CBN, under the Godwin Emefiele-led administration, instituted restrictions on certain items to trade on the official forex market, in a bid to defend the Naira from depreciation through flooding of dollar into the intermarket.
CBN’s ban on 41 items including private jets, toothpick, soaps, rice from being traded and importers accessing forex for this products have led to a number of Nigerian companies finding it difficult to pay their foreign lenders.
The CBN has defended the policy, despite calls for a review by local and foreign financial analysts, saying the restriction of the 41 items from trading forex was in line with keeping the Naira competitive and preventing devaluation and depletion of Nigeria’s external reserves.
According to industry experts, the restrictive policy by the CBN has led Nigerian banking operators, which are the guarantors of those payments, to owe their foreign counterparts between $3bn and $4bn. The Nigerian importers, who have commercial banks as their guarantors, are faced with the challenge of paying up their foreign lenders as they have the Naira equivalent of the amounts owed buy cannot buy dollars to upset due to the ban.
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