According to a Bloomberg report, Nigeria’s central bank has swallowed a staggering $9 billion loss in 2024 after settling long-standing derivatives contracts, part of a major effort to clean up the country’s foreign reserves and regain market credibility.
What Happened?
According
to the Central Bank of Nigeria’s audited financial statements, released last
Friday and cited by Bloomberg, the losses stem from clearing “legacy”
foreign exchange forward contracts.
- Total Loss: ₦13.9 trillion
(~$9 billion)
- Compared to 2023: ₦6.3
trillion
- Purpose: Settle overdue
derivatives and reduce off-balance sheet liabilities
CBN
Governor Yemi Cardoso had earlier confirmed Nigeria had over $7 billion in
unsettled FX obligations. By cleaning them up, the apex bank is aiming for transparency
and investor reassurance.
Impact on
Foreign Reserves
According
to CBN reserve data, gross external reserves rose to $37.9 billion as of
April 30, their highest level in nearly a month, despite the massive
write-down.
Analysts
believe this signals a shift toward credibility in Nigeria’s FX position and
books.
Why It Matters
Nigeria
has long struggled with opaque forex management and delayed settlements, which scared
off foreign investors, distorted parallel market pricing, and strained
business operations.
By
clearing the backlog even at a
high cost CBN is:
- Owning up to past
liabilities
- Reducing FX uncertainty
- Signaling commitment to
reforms
Financial Juggernut’s Take:
Yes, $9
billion is massive. But Nigeria’s economic credibility has a price and this may be it.
The key
now is consistency:
- Keep FX rates
market-reflective
- Build reserve buffers sustainably
- Prevent new legacy
liabilities from forming
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