Agora Policy report has shown that Nigerian government split N4.23 trillion in foreign exchange profits in total over the past 12 months, or 20.14 percent of the gross federal account allocation committee (FAAC).
The Abuja-based think tank stated in its research, “How Exchange Gain Became a Major Source of Federation Revenue,” that the unification of the foreign currency (FX) market led to a growth in exchange gains.
The size of the revenue that is distributed among the three levels of government has changed significantly since the exchange rate modifications last June, as seen by the higher foreign exchange gains.
“From May 2023 to April 2024, a total of N4.23 trillion was shared as exchange gain by FAAC, representing 20.14% of N20.99 trillion, which was the gross FAAC revenue for the 12-month period,” Agora Policy said in its report.
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It added that exchange gain recorded its best performance in February 2024, raking in N657.44 billion, a 28.26 percent of the gross FAAC revenue for the month.
This, the think-tank said, is higher than the total exchange gain of N510.26 billion for the 48 months or four years from May 2019 to April 2023.
The report added that the average official exchange rate for February 2024 was N1,509.83 per dollar as against the 2024 budget rate of N800/$.
Exchange gain represents the difference between the exchange rate projected in the budget and the actual rate at which applicable revenue streams are converted at FAAC.
The non-governmental organisation said exchange gain has been a feature of the FAAC overtime.
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The FAAC largely consists value-added tax (VAT) and statutory revenue (subdivided into mineral revenue and non-mineral revenue), exchange gain, excess bank charges, and Electronic Money Transfer Levy (EMTL).
Agora Policy said while the other sources have been small, the exchange gain has massively increased in the past year, even surpassing VAT’s contribution to FAAC in two months: June 2023 and February 2024.
“The beneficiaries of exchange gain are: the states that earn 13% derivation, and the federal government, all the 36 states and the 774 local government areas that respectively take 52.68%, 26.72%, and 20.60% share of the exchange gain less 13% derivation,” the Abuja-based think-tank noted.
“In FAAC disbursement for January 2024, a sum of N200bn was saved in non-oil excess account from exchange gain,” it added.
