May 21, (THEWILL)- The Federation Accounts Allocation Committee (FAAC) distributed N1.208 trillion in revenue to the Federal Government, States, and Local Government Councils for May 2024 from April revenue.
On a month-by-month basis, this figure represents an increase of N191 billion or an 18.8 percent jump compared with the N1.017 trillion distributed in April from March 2024 revenue.
The difference is also remarkably huge when compared with the N976.34 billion FAAC proceed shared by the three tiers of government in May 2023 from the previous month’s (April) revenue. This represents an increase of N231.66 billion or 23.8 percent.
On the face value, the federal, state and local government councils are harvesting incredible volume of FAAC revenue which is largely attributed to the removal of fuel subsidy by the federal government in May 2023.
However, a closer look at the state of the nation’s affairs would reveal that the source of the ‘voluminous’ naira is the depreciation of the local currency which has lost over 200 percent of its value in the past 11 months. This is more so when the high cost of debt servicing and the secret monthly subsidy are factored in.
In real terms, the federal, state and local government councils are receiving a relatively ‘worthless’ volume of the naira which has lost 217.46 percent of in the last 11 months.
As of June 13, 2023, the naira exchanged N471.67 at the Autonomous Foreign Exchange Market (AFEM) and N768 at the parallel market. On the abolition of the multiple exchange rate windows, which signified the devaluation of the naira, on June 14, 2023, the local currency slumped to N664.04/$1 on the same day, representing a depreciation of 40.78 percent in one swoop.
This triggered a roller-coaster trend for the naira which suffered intense volatility that the monetary policy authorities have lost control of. As of Friday, May 16, 2024, the naira exchanged N1,497.38/$1 at the official window.
This implies that the naira has lost N217.46 percent as at date since June 14, 2023.With inflation rate hitting a 28-year high of 33.69 percent in April, from 33.20 percent in March, according to recent report by the National Bureau of Statistics (NBS), it becomes obvious that the federal, state and local government councils are carrying huge volume of naira with less value, in real terms.
Of more concern is the continued rise in cost of food. The NBS report showed that Nigeria’s high inflation rate is driven by food inflation which hit an all-time high of 40.53 percent, against 40.01 percent in March. Â
According to the NBS report, food and non-alcoholic beverages category continued to be the biggest contributor to inflation in April, stressing that food inflation which accounts for the bulk of the inflation basket, reached 40.53% in annual terms, against 40.01% in March.
Price pressures have left millions of Nigerians grappling with the worst cost of living crisis in decades as they struggle to meet their basic needs.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
