The Central Bank of Nigeria (CBN) on Friday approved a Special Secondary Market Intervention Retail Sales (SMIS) for airlines operating in the country.
Also, other critical sectors to benefit from the one-off exercise dedicated to the clearance of the backlog of matured foreign exchange obligations are raw materials and machineries for manufacturing companies and agricultural chemicals.
This resolution by the apex bank to intervene in the Inter-Bank Forex market through forward settlement is expected to engender market confidence, ensure access to Forex by the airlines to settle their obligations and sustain the integrity of the Nigerian Inter-Bank Foreign Exchange market.
The import of this peculiar exercise is that the CBN will not apply the relevant provisions under clause 2.4.3 (i) of its Revised Guidelines for the Operation of the Nigerian Inter-Bank Foreign Exchange Market which provides that “all SMIS bids shall be submitted to the CBN through the FXPDs”. Consequently, CBN shall receive bids from all the Authorized Dealers.
The CBN will also not apply the relevant provisions under clause 2.4.3 (i) of the Guidelines which provide that “Spot Forex sold to any particular end-user shall not exceed 1% of the overall available funds on offer at each SMIS session”.
According to the CBN, “Whereas the bids are on Spot Forex basis as the Authorized Dealers’ accounts with the CBN will be debited in full for the Naira equivalent of the USD bid amount, the CBN will settle the bids through forward settlements of 2 months. Customers that are not willing to accept the settlement terms have been advised not to participate in this Special SMIS – Retail.”
Reacting to the development, Minister of State for Aviation has described the special intervention by the Central Bank as a great relief for airline operators in the country who have complained bitterly over their inability to access the required foreign exchange to settle their backlog of obligations and which has adversely affected their operations.
According to the Minister, the Aviation Sector is so critical to the nation’s security and global image that it cannot be overlooked or toyed with, saying that the apex bank has taken the right decision that would not only strengthen existing airlines, but also inspire confidence in aspiring operators in Nigeria’s aviation industry.
It will be recalled that Senator Sirika at a recent meeting with members of the Airline Operators of Nigeria (AON) promised to take up the issues with the authorities of the Bank after the operators had complained of lack of access to Forex, with many of them on the verge of folding up.