The foreign exchange story in Nigeria is never short of drama.
Every now and then, something comes along that forces us to pause and ask: how did we get here? The latest episode is the Central Bank of Nigeria’s forensic audit into undelivered FX forward contracts.
To be honest, this is now old news and it kind of went unnoticed – the market simply moved on.
At the time this news broke, this message was circulated;
Dear CEOs,
Outstanding Forwards:
It appears the CBN is refunding Naira for the disputed forwards today. No interest or adjustment for the opportunity or cost adjustment for funds deposited with the CBN for such a long time.
Just the same amount was paid by customers over 2 years ago.
In simple terms, the CBN closed out those positions at potentially NGN360 as opposed to the expected rate of NGN1500+ today.
So the question to my mind is this – Who is taking the loss? The Banks or the Customers?
If you only skimmed the headlines, you probably saw words like “cancellation,” “audit,” or “invalid contracts.” But what does it all mean? Let’s unpack it.
Think of it as a promise for the future. A company gives the CBN its naira today, and in return, the CBN promises to deliver US dollars on a future date, at a pre-agreed exchange rate.
It’s like paying for your flight ticket months ahead because you want to lock in today’s price and avoid the risk of it doubling later. Straightforward—until it isn’t.
The problem: murky contracts and weak controls under the former CBN management.
Over the years, the CBN entered into thousands of these deals. But when the time came to deliver dollars, things didn’t add up. Some forward contracts looked fishy. Others flat-out didn’t meet the rules. So instead of quietly paying them off and watching reserves drain, the CBN decided to hit pause.
In 2023, Deloitte was hired to conduct a forensic audit—not a surface check, but a deep dive. They combed through contracts, trade confirmations, import/export records, Customs documentation, and even went as far as matching company names across platforms like Form M (used for imports) and the FX auction system.
In 2023, Deloitte was hired to conduct a forensic audit—not a surface check, but a deep dive. They combed through contracts, trade confirmations, import/export records, Customs documentation, and even went as far as matching company names across platforms like Form M (used for imports) and the FX auction system.
In short, many of these contracts had no business being in the system.
They drew a line. Valid contracts where documentation was checked out were honoured. Dollars were delivered. Invalid ones were cancelled. We believe that CBN redeemed and closed out about USD5bn dollars of these forward, and USD2bn dollars were in dispute.
The naira that counterparties had paid upfront was refunded, but no foreign currency was released. In other words, the system said: You can get back your naira, but don’t expect dollars if your paperwork is wrong.
Some would argue that CBN should pay interest on naira held in its possession over the period, or a middle ground in terms of the exchange rate to be applied.
And in cases where the audit suggested fraud, misrepresentation, or outright abuse, we believe the files were handed to law enforcement. So some people may still be explaining themselves to EFCC and others in the months ahead.
That would have been the easy option, but also probably a reckless one. Paying out on invalid contracts would have:
Given that this news died a natural death, it seems like the banks are not challenging, or they are likely lobbying quietly on the bank end. It would seem the CBN position is that there would be no appeals, no do-overs
For banks and counterparties hoping for a second chance, the door is closed. Deloitte’s findings were final, after giving everyone the chance to explain themselves during the review. The process is over. *Case closed.*
Here’s the bigger picture: this episode signals a new standard. If you’re bringing forward contracts to CBN, your paperwork must line up with Forms M and A, Customs records, approvals, all of it.
No more vague descriptions like “general goods.” No more approvals exceeding import values. No more creative shortcuts.
Forbearances should only really be something granted for 9 months – 12 months maximum. In Nigeria, this has lingered for more than 3 years. Where do we draw the line in the sand?