By Ayo Yusuf
The adoption of a single exchange rate has began to yield positive results as the Federal Account Allocation Committee doles out a record N1.959trn to the three tiers of government this July.
This is nearly triple the N786.161 billion shared in June and more than triple the N655.93 billion distributed in May.
Allocations are usually shared from the preceding month’s revenue — meaning June will be shared in July.
As June was the month when the country began to adopt a realistic exchange rate for the dollar, it means that such incomes as come into the country which is dollar dominated is shared according to a rate determined by the market which is higher than those used by commercial banks.
The Federation Account Allocation Committee (FAAC) will meet in Abuja on Wednesday to allocate the revenue to the tiers of government — federal, state and local — based on the sharing metrics.
Statutory collections make up N1.7 trillion of the federally collected revenues, followed by N293 billion from VAT and N12 billion from electronic money transfer charges.
It is not clear yet if there had been any higher monthly revenue in the history of Nigeria but at the very least a revenue of nearly N2trn would be among the highest ever.
An analysis of the situation suggests that the fall in the official exchange of the naira might have contributed to the seemingly unprecedented rise in revenue.
FAAC adopted N436.38/$ as exchange rate for the calculation of the forex component of federally-collected revenues for June 2023 but this has now gone up to at least N750/$. The fact that the naira has even fallen further to about N800/$ indicates that the actual exchange rate used for July may have been higher than that used for June.
FAAC is made up of the minister of finance as chairman, all state commissioners of finance, state accountants-general, the accountant-general of the federation and the permanent secretary of the federal ministry of finance.
