Nigeria’s central bank governor said on Monday that a forensic audit of $7 billion of overdue foreign exchange transactions the bank has been trying to clear had uncovered irregularities affecting $2.4 billion worth of the transactions. Central Bank of Nigeria (CBN) Governor Olayemi Cardoso said in an interview on local channel Arise TV that the irregularities ranged from missing paperwork to non-existent entities and beneficiaries receiving unauthorised foreign exchange allocations. Africa’s largest economy is experiencing crippling dollar shortages that have pushed its naira currency to record lows.

The audit, conducted by management consultants Deloitte, was aimed at identifying whether there were invalid transactions in the forex backlog, one factor behind the naira’s slide. “We discovered that of the roughly $7 billion, about $2.4 billion had issues,” Cardoso said, adding the central bank would not honour non-compliant transactions. So far, about $2.5 billion of the backlog across sectors including aviation, manufacturing and energy has been paid, and Cardoso said the remaining $2.2 billion would be cleared swiftly. “Having $2.2 billion outstanding is different from $7 billion. I believe we’re at the end of this road. We’ll clear everything soon and move on,” Cardoso said. The CBN last week announced a limit on how much banks can hold in foreign currency, capping their net open positions at 20% of shareholders’ funds for short positions and a zero limit for long positions.

Report this adIt also ordered banks to immediately liquidate excess holdings as part of a series of measures to boost dollar liquidity.The central bank now requires banks to have enough liquidity to cover maturing foreign exchange obligations, and lenders are also encouraged to have forex contingency funding arrangements with other institutions.”Our focus has been to start looking very aggressively at the supply side of the chain,” Cardoso said.Under Cardoso the central bank has pledged to pursue a more conventional monetary policy, and the bank aims to bring inflation down to 21% after hitting a 27-year high in December at 28.92%.