The Central Bank of Nigeria’s (CBN) forensic audit into undelivered foreign exchange (FX) forward contracts has sent ripples through the financial sector, exposing years of systemic lapses, questionable documentation, and alleged abuse of Nigeria’s forex window.
The apex bank, working with global audit firm Deloitte, reviewed billions of dollars in forward contracts — deals where the CBN had promised to deliver foreign currency at a pre-agreed rate in exchange for naira deposits from companies and banks.
While about $5 billion worth of contracts were deemed valid and honoured, another $2 billion were red-flagged, cancelled, and refunded in naira — without interest or compensatory adjustment.
For many firms, this meant receiving the exact naira they deposited more than two years ago, even though the exchange rate has since collapsed from around N400/$1 to N1,500/$1.
In effect, businesses that had counted on these forwards to hedge against currency depreciation are now absorbing heavy financial losses.
“It’s like paying for a flight two years in advance, only to get refunded the exact same amount when ticket prices have quadrupled,” one banker remarked.
Over the years, the CBN reportedly signed thousands of forward contracts, some of which were marred by fake documentation, inflated import values, or mismatched Customs records.
Rather than deplete reserves by honouring all claims, the CBN launched a forensic review.
Deloitte investigators cross-checked contracts against Forms M and A (import and FX documentation), Customs filings, and shipping records. Where inconsistencies arose, contracts were flagged and in some cases referred to law enforcement.
Dr. Muda Yusuf, CEO of Centre for the Promotion of Private Enterprise (CPPE): “The audit is a painful but essential reset. For years, Nigeria’s forex regime was exploited through dubious contracts. If the CBN had honoured everything, we would have rewarded fraud while draining reserves.”
Bismarck Rewane, CEO of Financial Derivatives Company: “The real losers here are corporates who acted in good faith but got caught in bureaucratic delays. Many hedged responsibly, but because of systemic inefficiency, they are now facing losses. This will force companies to rethink reliance on CBN forwards.”
A Lagos-based economist, Dr. Ayo Teriba, “What the CBN has done is send a message — only clean paperwork gets honoured. The FX market will become more disciplined, but the credibility of Nigeria’s financial system will take time to rebuild.”
Banks have remained largely silent on the matter, suggesting quiet negotiations are ongoing behind the scenes.
Experts warn that unresolved disputes could impact corporate earnings and increase pressure on listed banks, many of which have yet to publish their first-half 2025 results due to regulatory forbearance.
“If these losses are pushed onto corporations, we may see weaker earnings, higher loan defaults, and more balance sheet stress for banks. But if banks absorb the hit, capital adequacy ratios will take a knock,” one analyst noted.
The CBN, however, insists that the new regime is about restoring discipline in forex management. Governor Olayemi Cardoso has emphasized that all legitimate obligations will be met, but “legitimate” is now defined strictly.
The forensic audit represents a shift away from Nigeria’s historically loose forex practices, where rules were often bent in favour of politically connected players.
For businesses, the lesson is clear: forward contracts are no longer guaranteed safety nets unless backed by watertight documentation.
For banks, it raises fresh questions about transparency, provisioning, and the sustainability of regulatory forbearance that has lingered for over three years.
