The convergence of the country’s exchange rate led to a substantial rise in revenue from foreign exchange differentials, reaching N1.36 trillion in a span of six months.
This information is based on data extracted from the communiques of the Federation Account Allocation Committee.
The extraordinary profits are attributed to foreign exchange revaluation gains resulting from the depreciation of the naira, which is currently trading at N825/$ compared to its closing rate of N461.50/$1 in 2022. The communique indicates that the difference surged from N0.639 billion in June to N364.87 billion in November.
Furthermore, the government allocated N320.89 billion in July, N229.67 billion in August, N186.81 billion in September, and N262.89 billion in October.
Breaking down the distribution of accrued revenue among the three tiers of government, an analysis of the document reveals that, following the gain of N625.77 billion from exchange difference revenue in the federation account, state governments received N317.36 billion, while local governments received N244.66 billion over the six-month period.
Before the distribution of funds among the three tiers of government, there are typically statutory deductions, including a 13 percent derivation and other charges and costs.
After deductions, the Federal Government receives 52.68 percent, State Governments receive 26.72 percent, and Local Governments receive 20.60 percent based on the current vertical allocation formula applied to the net revenue distributable from the federation account.
Within the 52.68 percent allocated to the Federal Government, specific allocations include one percent for general ecological problems, one percent for the Federal Capital Territory, 1.68 percent for the development of natural resources, and 0.5 percent for statutory stabilization. The remaining balance of 48.5 percent is designated for the Federal Government.
Recent reports indicated that at least 13 state governments generated substantial foreign exchange revaluation profits totaling N71.59 billion in three months. This information was disclosed through data obtained from the third-quarter budget implementation report (July to September), accessible on each state’s website. Among these 13 states, Akwa-Ibom recorded the highest earnings at N10.2 billion, followed by Jigawa with N7.23 billion and Imo with N6.26 billion.
Following the aforementioned states, Kogi recorded N5.92 billion, Nasarawa garnered N5.75 billion, Plateau accumulated N5.65 billion, Abia secured N5.34 billion, Adamawa matched the figure of N5.34 billion, followed by Enugu with N5.1 billion, and Zamfara with N5.02 billion.
Additionally, it was noted that Bauchi had the smallest profit, amounting to N120 million, while Ebonyi received N4.79 billion, and Osun obtained N4.89 billion.