Sources within the apex bank Thursday told PREMIUM TIMES that there are concerns that funds from FAAC were often illegally converted to dollars by some corrupt state governors at the unofficial market, with a ripple effect on the value of the local currency.
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, PREMIUM TIMES reported that the Nigerian government blocked the online platforms of Binance and other crypto firms to avert what it considers continuous manipulation of the forex market and illicit movement of funds.
Sources within the major telecommunication companies in the country told PREMIUM TIMES Wednesday evening that the Nigerian Communications Commission (NCC) communicated the directive to telcos, which acted almost immediately.
Apart from Binance, other platforms such as Forextime, OctaFX, Crypto, FXTM, Coinbase, and Kraken, among others, were equally blocked.
Earlier, this newspaper reported how the government was considering blocking the online platforms of Binance and other crypto firms as part of efforts to avert the free fall of the local currency.
FAAC
Section 165 of the Nigerian constitution, as well as the Allocation of Revenue Act No.1 1982, stipulates that the revenues generated by the government should be credited into the federation account and disbursed monthly among the three tiers of government.
The Federal Account Allocation Committee (FAAC) was therefore constituted with the mandate to ensure that the indices are scrutinised monthly by representatives from states both at the commission (Commissioners, appointed by the Governors) and at the Office of the Accountant General of the Federation (through the FAAC committee which includes the Accountant Generals from all the States) who rely heavily on allocations.
The meeting is chaired by the Minister of Finance and attended by officials from the CBN, Office of the Accountant General of the Federation, Ministry of Finance, Ministry of Budget and National Planning, Revenue Mobilization Allocation and Fiscal Commission (RMAFC), Commissioners of Finance of the 36 states, and the Secretary of Finance for the Federal Capital Territory.
FAAC is responsible for reviewing and adopting the allocation of funds to states, making deductions and ensuring accurate disbursement of funds to the states, and issuance of mandate letters to the CBN to facilitate the disbursement of funds to individual states and the FCT.
Under the prevailing revenue-sharing formula, the federal government gets 52.68 per cent of the revenue shared; states get 26.72 per cent, while local governments get 20.60 per cent. The funds are typically channelled into various developmental commitments by the FG, states and LGs.
In January, a total of N1.127 trillion was disbursed to the three tiers of government, down from N1.783 trillion disbursed in December 2023.
According to a communiqué issued by FAAC at the end of the meeting, the total distributable revenue comprised distributable statutory revenue of N363.188 billion, distributable Value Added Tax (VAT) revenue of N458.622 billion, Electronic Money Transfer Levy (EMTL) revenue of N17.855 billion and Exchange Difference revenue of N287.743 billion.
Fears and Uncertainty
Meanwhile, sources within the intelligence agencies told PREMIUM TIMES Thursday that there are intelligence reports showing how the value of the local unit depreciates whenever FAAC allocations are shared among all tiers of government.
There are claims that some governors convert vast amounts of Naira to dollars in the black market each time FAAC funds are disbursed.
Those familiar with the matter say huge chunks of the allocations are usually wired through suspect bank accounts to Bureau De Change operators who then deliver dollars in cash to the governors. The corrupt practice, authorities believe, is destabilising the country’s foreign exchange market.
A source with knowledge of the situation told this newspaper that the governors have been confronted with details of the matter by the presidency.
To avert developments that could negatively impact the local currency, inside sources confirmed to PREMIUM TIMES that security agencies have been alerted to monitor all forms of sinister activities in the foreign exchange market ahead of the FAAC meeting on Thursday.
Earlier on Tuesday, the office of the National Security Adviser directed law enforcement agencies to take firm measures against anyone engaged in foreign exchange market speculation.
“In a concerted effort to safeguard Nigeria’s foreign exchange market and combat speculative activities, the Office of the National Security Adviser and the Central Bank of Nigeria are joining forces to address challenges impacting the nation’s economic stability,” the office said in a statement.
“The CBN’s proactive measures to stabilise the foreign exchange market and stimulate economic activities have been commendable. However, the effectiveness of these initiatives is being undermined by the activities of speculators, both domestic and international, operating through various channels, thereby exacerbating the depreciation of the Nigerian naira.”
