Nigeria clears valid FX backlogs

Nigeria's Central Bank recently announced the successful clearing of all valid foreign exchange backlogs amounting to 7 billion dollars. This significant achievement comes after the payment of 1.5 billion dollars in residual balances to bank customers. Femi Oladehin, a Partner at Argentil Capital Partners, discussed the implications of this development in an interview on CNBC Africa. Oladehin highlighted the impact of the FX backlog on investor confidence, emphasizing the importance of distinguishing between valid and unverifiable claims. He noted that the resolution of the backlog has instilled confidence in the market regarding the Central Bank's ability to meet its obligations. The positive news has sparked optimism among investors, leading to a potential surge in foreign portfolio inflows and foreign direct investments. The clearance of the backlog has also contributed to the appreciation of the Naira, signaling a positive outlook for the local currency. One of the key issues discussed during the interview was the methodology used to settle the backlog, particularly concerning foreign airlines. Oladehin criticized the preferential treatment given to airlines in the past and urged them to adapt to market forces when pricing their tickets. He emphasized the importance of consistency in policy and the need to focus on improving productivity and increasing export proceeds to sustain economic growth. The interview concluded with a call for manufacturers to seek solutions to the challenges posed by the current economic environment rather than relying on special windows. Oladehin's insights shed light on the steps needed to maintain stability and promote growth in Nigeria's economy, emphasizing the role of sound policy decisions and strategic investments.