The House of Representatives has directed its Committee on Small and Medium Size Enterprises (SMEs) to undertake a thorough investigation into the cancellation of forward contracts valued at $2.4 billion, which were previously sold to manufacturers by the Central Bank of Nigeria (CBN). The CBN recently made an announcement invalidating around $2.4 billion worth of forward contracts that had been sold to manufacturers.
Legislators gathered in session at the Federal House of Representatives
The House of Representatives has instructed its Committee on Small and Medium Size Enterprises (SMEs) to conduct a thorough investigation into the cancellation of $2.4 billion worth of forward contracts that were sold to manufacturers by the Central Bank of Nigeria (CBN).
The Central Bank of Nigeria (CBN) recently made public its decision to nullify forward contracts valued at around $2.4 billion, which were sold to manufacturers. The apex bank justified this action by stating that the businesses involved did not meet specific requirements.
However, during the plenary session on Wednesday, a motion of urgent public importance was adopted. This motion, introduced by Hon. Zakaria Dauda Nyampa, Hon. Ojema Ojetu, and Hon. Obed Shehu, prompted the Committee to request the presence of the impacted manufacturing companies and Central Bank Governor Olayemi Cardoso for a thorough examination of their records to distinguish the legitimate companies from the others.
In his statement, Hon. Nyampa pointed out that the annulled forward contracts were originally agreed upon about a year ago by various Nigerian manufacturing companies and the CBN to protect against currency fluctuations and risks associated with exchange rates.
He stated that after entering into the agreements, the companies’ bank accounts were debited in Naira equivalents and letters of credits were issued by the commercial banks involved. However, the CBN chose to dishonor the contractual obligations and cancel the transactions a year later.
At a time when the nation is grappling with escalating inflation, unemployment, heightened poverty levels, and mounting hardships, there are growing concerns about the cancellation of forward contracts.
His apprehension was centered around the potential repercussions of persisting in canceling the mentioned transactions, which could ultimately lead to the widespread collapse of small and medium-sized businesses and the departure of large corporations from Nigeria.
Subsequent to the motion’s adoption, the House bestowed upon the Standing Committee a timeframe of three weeks to undertake the investigation and furnish a report, which would then serve as a basis for subsequent legislative actions.