Nigeria Records N713.1 Billion Windfall from Naira Devaluation

An analysis of Nigeria’s government earnings has revealed a significant revenue windfall of N713.1 billion resulting from the devaluation of the national currency, the naira.

The devaluation, initiated in June, was designed to enhance the country’s foreign exchange earnings and, in turn, boost government revenue.

The Federal Account has benefitted from N713.1 billion in exchange difference earnings between June and September 2023.

The details were extracted from the monthly communiqué of the Federation Account Allocation Committee, covering the specified period.

In June, exchange difference revenue and rate differential amounted to N147.07 billion, while July contributed N39 billion in exchange gains. August saw N283.91 billion derived from exchange gains.

For September, the communique issued by the Federation Account Allocation Committee indicated that the total distributable revenue of N903.48 billion included distributable statutory revenue of N423.01 billion, distributable Value Added Tax revenue of N282.67 billion, Electronic Money Transfer Levy revenue of N10.99 billion, and Exchange Difference revenue of N186.81 billion.

The devaluation of the naira, which began in June, led to its weakening in the foreign exchange market.

The currency has depreciated significantly, from its previous N471 to N809.02 per US dollar as of Monday in the Investors & Exporters FX window.

This unification has contributed to the rise in revenue from exchange differences.

JP Morgan has noted that a weaker exchange rate benefits the government, as it leads to higher naira revenues from oil and gas exports.

The devaluation strategy is expected to increase the revenue derived from these sectors.