Forex Crisis: Concerns At CBN As FG, States, And LGs Gather To Discuss FAAC Allocations

The Federation Account Allocation Committee said it shared N906.96bn among the three tiers of government.

The Federation Account Allocation Committee (FAAC) is scheduled to distribute allocations from the revenues generated into the federations' accounts among the federal, state, and local governments on Thursday. This has the Central Bank of Nigeria (CBN) extremely concerned that the Naira may depreciate even more.

There are worries that some dishonest state governors frequently unlawfully converted FAAC funds to dollars at the black market, which had an impact on the value of the local currency.

FAAC: The Allocation of Revenue Act No. 1 of 1982 and Section 165 of the Nigerian Constitution both specify that government revenues must be credited into the federation account and distributed among the three levels of government on a monthly basis.

The current revenue-sharing formula allocates 52.68% of the revenue to the federal government, 26.72% to the states, and 20.60% to local governments. The FG, states, and LGS usually use the money for different developmental commitments.

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The N1.127 trillion that was distributed to the three levels of government in January 2023 was less than the N1.783 trillion that was distributed in December 2023.

There are speculations that some governors use the black market to exchange large sums of Naira for dollars each time FAAC funds are distributed.

According to those with knowledge of the situation, significant portions of the allocations are typically transferred to Bureau De Change operators via dubious bank accounts, who subsequently give the governors cash payments. Authorities think the corrupt practice is causing the foreign exchange market in the nation to become unstable.