Emmanuel OchayiIn a revelation by the Federation Account Allocation Committee (FAAC), November 2023 witnessed a surge in the Federation Account, registering an additional N101.98 billion compared to October, all thanks to revenue from exchange differences which amounted to N364.87 billion.
Speaking on the exponential increase, Finance Minister Sarah Johnson highlighted, “The unification of exchange rates has undeniably bolstered government revenue, a crucial boost amidst the ongoing challenges of naira devaluation.”
Join our WhatsApp ChannelThe breakdown of revenue distribution unveiled that before apportionment among the tiers of government, statutory deductions such as the 13% derivation and other charges were taken into account.
READ ALSO: FAAC Allocates N1.088trn Revenue To Federal, State, LGAs For November
Following deductions, the Federal Government received 52.68%, the State Government 26.72%, and the Local Government 20.60% from the distributable net federation account revenue.
Analyzing FAAC’s communique, it’s evident that in October, N262.89 billion from exchange difference revenue was shared with the Federal Government receiving N93.323 billion, States N47.334 billion, Local Government Councils N36.493 billion, and N25.737 billion allocated to Derivation (13% of Mineral Revenue).
Contrastingly, in November, the figures ballooned with the Federal Government receiving N175.817 billion, States N89.177 billion, Local Government Councils N68.751 billion, and N31.124 billion for Derivation.
The unification of exchange rates, following President Bola Tinubu’s pledge and the subsequent action by the Central Bank of Nigeria (CBN) to float the naira, resulted in fluctuations between N750/$ and N950/$.
Commenting on this, a report from Comercio Partners Limited emphasized, “The naira’s depreciation against the dollar by 19.26% in November 2023, reflecting a close at N942.12/$1, underscores the ongoing challenges within the nation’s FX market.”
Several institutions, including the Institute of Chartered Accountants of Nigeria (ICAN), have expressed optimism about the long-term impact of this rate unification.
They anticipate increased government revenue in naira terms, potential growth in the securities market, and an influx of foreign investments. However, the adverse effects on local manufacturing companies due to FX losses in their financial statements remain a concerning downside of the fluctuating currency.
As the government continues to navigate the complexities of currency valuation, the financial landscape remains a balance between increased revenue and challenges for various sectors heavily reliant on stable exchange rates.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
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