Federal, State, and Local Governments Benefit from N2.517 Trillion FAAC Exchange Rate Gain in 2023
In a significant financial development, the Federal Government, alongside the 36 states and all local government areas (LGAs) in Nigeria, shared a substantial sum of approximately N2.517 trillion as FAAC exchange rate gain for the fiscal year 2023. This revelation comes from a thorough review of the Federal Accounts Allocation Committee (FAAC) report spanning from January to December 2023.
The remarkable amount was derived from a gross FX gain totaling N2.836 trillion amassed over the course of the year. Noteworthy is the fact that the federation received the entire N2.836 trillion during this period, after a deduction of N318.29 billion from the non-oil excess account.
Breaking down the distribution, the federal government received the lion’s share, amounting to N1.211 trillion, while the 36 states collectively divided N614.49 billion, and the LGAs received N473.92 billion. Additionally, states endowed with mineral resources, particularly oil, obtained N217.38 billion as 13% derivation during this period.
An in-depth analysis of the FAAC report revealed that allocations shared among the federation’s units between January and April did not include any FX gain. However, from May to December, there was a notable surge, culminating in the reported N2.836 trillion.
May emerged as the month with the highest gain from forex, with approximately N639.39 billion credited to the federation’s account. Interestingly, this period of consistent FX gain closely coincided with the Central Bank of Nigeria’s (CBN) move to unify the forex market—a policy measure that analysts have deemed a partial float.
The FAAC report for the 12-month period also encompassed FX differential/equalization payments for February, April, and July, totaling N246.31 billion. These payments amounted to N120 billion for February, N70 billion for April, and N56.31 billion for July.
In a policy shift, President Tinubu, upon assuming office in May, abolished the subsidy on petrol, a decision aimed at curbing significant government revenue losses. Furthermore, the CBN, under the President’s leadership, announced the unification of the foreign exchange market in June.
Related Posts
While the government recorded notable FX gain allocations, the private sector and businesses presented a contrasting narrative, reporting record levels of FX losses. Companies such as Dangote Cement, Notore, and BUA Cement collectively reported a foreign exchange loss of -N129.811 billion in 2023.
Additionally, foreign-owned subsidiaries trading in the Nigeria Exchange faced substantial losses amounting to N900 billion, primarily attributed to the unification of the forex market and the transition of the naira to a floated rate. These companies span various industries, including telecommunications, consumer goods, and breweries.
