House of Representatives, on Wednesday, resolved to conduct holistic investigation into the cancellation of $2.4 billion worth of forward contracts sold to manufacturers by the Central Bank of Nigeria (CBN).
Recently, CBN announced the invalidation of approximately $2.4 billion worth of forward contracts sold to manufacturers. According to the apex bank, this decision was informed by the discovery that the affected businesses failed to fulfill certain conditions.
The resolution was passed sequel to the adoption of a motion of urgent public importance, sponsored by Hon. Zakaria Dauda Nyampa, Hon. Ojema Ojetu and Hon. Obed Shehu.
To this end, the House mandated its Committee on Small and Medium Size Enterprises (SMEs) to invite the affected manufacturing companies alongside the Central Bank Governor, Olayemi Cardoso to examine their documents with the view to identify genuine companies with legitimate transactions.
In his lead debate, Hon. Nyampa noted that the invalidated forward contracts were originally entered into about a year ago between various Nigerian manufacturing companies and the CBN to hedge against currency fluctuations and risks associated with exchange rates.
According to him, having entered into these agreements affected companies’ bank accounts debited in Naira equivalents and letters of credit issued by the participating commercial banks, the CBN decided to dishonour the contractual obligations and cancelled the transactions, one year thereafter.
He expressed concerns that this cancellation of forward contracts is coming at a time of worsening national economic challenges such as galloping inflation, unemployment, increased poverty level, and hardships.
He worries that if sustained, the cancellation of the said transactions will cause the widespread collapse of small and medium companies and the exit out of the country of large corporations with all the attendant consequences thereof.
Adopting the motion, the House gave the Committee three weeks to carryout the investigation and report back for further legislative action.
