"That Was The Plan": Naira Devaluation Boosts Government Revenue by N713bn
- The Nigerian government has made an estimated N713.1 billion since it devalued the naira
- Data from FAAC shows that between June and September 2023, federal government revenue has been boosted due to the naira float
- The CBN embarked on the unification of the foreign exchange windows to boost forex liquidity in the country
Pascal Oparada has over a decade of experience covering Tech, Energy, Stocks, Investments, and Economy.
The Nigerian government has earned N713.1 billion in revenue from the naira devaluation, according to an analysis of earnings by the government.
The devaluation was meant to enhance Nigeria's foreign exchange earnings and revenue.
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Government revenue boosted by naira crash
Federal accounts have increased by N713.1 billion in exchange for the difference in earnings between June and September 2023.
Figures from the federation account obtained from the monthly communique of the Federation Account Allocation Committee (FAAC) for the period under review indicate a boost in the nation's revenue.
In June 2023, the exchange difference revenue and rate differential was N147.07 billion, with N39 billion as the exchange gain.
Punch reports that the government earned N283.91 from exchange gain in August. For September, the figure was N903.48 billion in total distributable income comprising N423.01 billion, VAT revenue of N282.67 billion, Electronic Transfer Levy revenue of N10.99 billion, and Exchange Difference of N186.81 billion.
FG unifies FX to bring in more revenue
On June 14, 2023, The Central Bank of Nigeria asked commercial banks to remove the rate cap on the naira at the foreign exchange market's official Investors and Exporters window to allow the local currency a free float.
The development led to the depreciation of the naira, which has fallen from N471 to a dollar to N869.9 to a dollar as of Tuesday, November 7, 2023.
The naira deprecated to N1,080 per dollar at the parallel market.
This unification has bumped up revenue from exchange differences.
The naira has paused its four-day recovery at the official and parallel markets after the Central Bank of Nigeria (CBN) began to clear Forex backlogs, which are blamed for the naira crash.
Analysts believe the scarcity of Forex was responsible for the naira's woes as importers and exporters scrambled for the few dollars available for transitions.
Naira experiences a crash at the official market
On Tuesday, November 7, 2023, the exchange rate between the naira and the dollar dropped from N869.91 to a dollar in the official market.
The crash represents a loss of N60.89 or a 6.99% decline compared to the N809.02 it closed the week on Monday, October 6, 2023.
The crash is the second time the naira has fallen against the US greenback after CBN began clearing the Forex backlog.
The naira recorded N110 per dollar at the intraday high and N700 to a dollar at the intraday low, showing a disparity of N400.
Data from NAFEM, the official Forex window for Nigeria's foreign exchange market, FX turnover at the close of the trading day was $70.92 million, a 19.08 decline compared to the day before.
Exchange rates near convergence as Naira rallies in official, black markets by over 20% in one week
Legit.ng reported that after three weeks of freefall in the official and black markets, there seems to be some respite for the Nigerian naira.
From the beginning of October, the naira witnessed an unprecedented fall against the US dollar, which analysts blamed on the shortage of Forex.
Nigeria is battling acute Forex challenges, affecting inflation and living standards, and worst of all, the naira.
Source: Legit.ng
