• Federation revenue rises to N2.068tr
• Probe currency crash after every FAAC meeting, Arewa Economic Forum tells Tinubu
• Sagay, Olawepo-Hashim ask Tinubu to dump float of naira
• FG benefiting from dollar rise against naira, Ndume alleges
• Be patient, we’re working on economy without rest, CBN governor assures

Amid the worsening economy occasioned by galloping inflation, the federation revenue rose to N2.068 trillion in January out of which the Federation Allocation Committee (FAAC) yesterday shared N1.149 trillion to the Federal Government, States and Local Government Councils. This was contained in the communiqué issued at the end of the FAAC meeting in Abuja.

According to Mr. Bawa Mokwa, Director of Press and Public Relations of the Office of the Accountant-General of the Federation (OAGF), the meeting chaired by the Minister of Finance and Coordinating Minister for the Economy, Wale Edun, shared N1.149 trillion total distributable revenue comprising statutory revenue of N463.07 billion, Value Added Tax (VAT) revenue of N391.78 billion, Electronic Money Transfer Levy (EMTL) revenue of N15.92 billion and Exchange Difference revenue of N279.02 billion.

Total deductions for cost of collection was N78.41 billion, total transfers, interventions and refunds was N639.92 billion and savings was N200 billion. Gross statutory revenue of N1.15 trillion was received for the month of January 2024. This was higher than the sum of N875.38 billion received in the month of December 2023 by N276.4 billion.

The gross revenue available from VAT in January was N420.73 billion. This was lower than the N492.5 billion available in the month of December 2023 by N71.77 billion.

The communiqué indicated that from the N1.149 trillion total distributable revenue, the Federal Government received N407.26 billion, the 36 State Governments received N379.40 billion, while the 774 Local Government Councils received N278.04 billion. A total sum of N85.10 billion (13 per cent of mineral revenue) was shared to the benefiting states as derivation revenue. The balance in the Excess Crude Account (ECA) was $473,754.57.

Ahead of yesterday’s FAAC meeting, there was intense apprehension at the Central Bank of Nigeria (CBN) that the naira may weaken further as some stakeholders had lately alleged that funds from FAAC were often illegally converted to dollars by some governors at the unofficial market, with a ripple effect on the value of the local currency. This was against reported trends and intelligence reports showing how the value of naira depreciates whenever FAAC allocations are shared among all tiers of government.

The CBN has, in recent weeks, introduced all sorts of strategies to address the free fall of the naira amid supply constraints in the official market. On Wednesday, the government blocked online platforms of Binance and other crypto firms to avert what it considers continuous manipulation of the foreign exchange (FX) market and illicit movement of funds.

Already, the Arewa Economic Forum (AEF) has asked President Bola Tinubu to take necessary steps to arrest the free-fall of the naira at the FX market. Chairman of the forum, Ibrahim Dandakata, in a press conference in Abuja, on Thursday, urged the president to investigate the reason for the increase in the dollar prices after every monthly FAAC meeting.

He called on the government to ban the practice of keeping dollars at home or in offices, and to clamp down on all hoarders of dollars. He also urged relevant government agencies to ban the practice of paying for goods and services online in dollars.

Dandakata said: “We are of the opinion that the Federal Government must summon adequate political will to arrest the free fall of the naira compared to the rising dollar. Dollar is not a legal tender in Nigeria. The government should therefore ban the practice of keeping dollars at home or in offices, and clampdown on all hoarders of dollars. The government should also investigate why dollars go up after every FAAC meeting.”

Meanwhile, Itse Sagay, a Senior Advocate of Nigeria (SAN) has called on President Tinubu to “urgently” stop the floating of the naira as a way of addressing the economic challenges in the country. The naira tumbled to an all-time low of N1,900/$ at the official market on Tuesday before picking up steam to close at N1,524 at the close of trading on Wednesday, while at the parallel market, it closed at N1,860.

In June 2023, as part of a series of policies to ensure economic recovery, CBN announced the unification of all segments of the FX market into the investors & exporters (I&E) window. The FX market liberalisation policy saw the devaluation of the naira as the ‘willing buyer, willing seller’ model was introduced.

Since the development, the FX market has continued to witness high levels of volatility, resulting in a further widening of the gap between the parallel and official rates. The policy also worsened inflation in the country, evidenced by the skyrocketing prices of goods and services.

In a chat with a news medium yesterday, Sagay said the Federal Government should have been more circumspect in applying the recommendations of the World Bank and International Monetary Fund (IMF) on naira float and petrol subsidy removal.

“I am not an economist, but I strongly believe that if the Tinubu administration had allowed local production of petrol to kick in before removing fuel subsidy, we wouldn’t have this crisis. My view is that the problem we are having today is related to fuel subsidy removal without first keying in local production and the floating of the naira,” he said.

The former chairman of the presidential advisory committee against corruption (PACAC) said IMF and World Bank recommendations are rarely adopted by developed nations.

“The IMF and World Bank are imposing their principles on us even though they themselves don’t apply it. In England, you have a National Health Service for the citizens who hardly pay anything. But here, they want us to pay for everything,” he said.

“The last time I was in the US, I wanted to use public transport. I never paid the full bus fare. My rate was subsidised because of my age. These are subsidy countries trying to eliminate subsidies from our own country. Every country the IMF and World Bank have visited and imposed their standards on, their economies have collapsed.”

In the same vein, Mr. Gbenga Olawepo-Hashim, former presidential candidate and a chieftain of the All Progressives Congress (APC), has asked the Federal Government to dump the free float of the naira in exchange to other currencies, for the Nigerian traditional managed float and allocate Nigeria’s forex and domestic resource for the nation’s economic and national priorities.

According to him, for some time now, especially since the “floating” of the exchange rate by the current regime, the jet speed with which the nation’s currency has been depreciating has migrated to a worrisome lightning speed, pushing the rate to about N1900/$ this week.

In a press statement released by his media office on Thursday, Olawepo-Hashim said: “It would be delusional to manage Nigeria’s FX regime with the expectation that the market would correct itself when the Nigeria market is controlled by different criminal gangs.”

According to him, “it is also time for real Central Bankers to assume control of the Central Bank rather than commercial bankers and even elements at the fringes of commercial banking who have hijacked the management of our monetary policies in the past two decades.”

Olawepo-Hashim therefore argued that “no serious nation in the world would continue to manage its affairs on the basis of failed recommendations by officials of Bretton Woods institutions who have consistently misadvised Nigeria to continuously devalue its currency for about 38 years.”

The Chief Whip of the Senate, Senator Ali Ndume, has alleged that the Federal Government is benefiting from the naira depreciation against the dollar. Ndume said rather than losing out from the naira depreciation against the dollar, the Federal Government is gaining more revenue to fund its 2024 budget. He stated this while speaking in an interview with Channels Television.

The Chief Whip disclosed that the government would have more naira to spend on its expenditure as the value of the dollar increased. According to Ndume, the 2024 budget, unveiled in November, relies heavily on dollars for income, given that a significant portion of the government’s revenue stems from crude oil exports, priced in dollars.

He also emphasised that Nigeria’s primary export, crude oil, remains highly sought after internationally, noting that the nation stands to gain from the prevailing exchange rate between the dollar and the naira.

However, the CBN governor, Olayemi Cardoso, yesterday, called on Nigerians to be patient as the management of the apex bank is working assiduously to ensure that naira is strengthened and stable. This also came as a renowned economist, Prof Sam Olofin, called on the Federal Government to dislodge the parallel and its powerful market operators, saying otherwise the naira will collapse and have dire consequences.

Cardoso stated this at a public lecture entitled: ‘Recent Developments in the Nigerian FX Market: Issues, Options and Way Forward’, organised by the Nigerian Economic Society (NES) at the CBN Centre of Excellence Hall, University of Ibadan.

Represented by Dr Usman Opanachi of the Department of Monetary Policy at CBN, the apex bank governor said “anytime naira is on trial, the CBN is also on trial.

‘’We are working day and night to address the challenges and we hope things will work out. The exchange rate features nearly in every sector. The exchange rate and inflation is very high now.

“Excess demand for forex in Nigeria is a legendary problem. It has just been there and over the years, the bank has implemented various strategies to address this problem. Those strategies have only been able to provide some temporary reliefs.

“The CBN does not supply or produce dollars; it is naira that it produces. CBN management thinks when you hold the price of a commodity that is determined by FX down artificially, a time comes when you will not be able to do that.

“The thinking of the new management of CBN is that the policies you have are intended to address the problem. The approach the management has adopted is a market-forces approach. The bank now allows the market forces to play a greater role in the determination of the price of naira.”

A renowned economist, Prof. Olofin, who delivered the public lecture, said it will be difficult for the CBN to control the foreign exchange saying the parallel market forces have taken dominance.

He added that the market forces are so powerful and influential and to worsen the matter, the law that established the foreign exchange does not allow anyone to call them to order.