Security Agencies on High Alert to Monitor Forex Market Ahead of FAAC Disbursements

The Central Bank of Nigeria (CBN) is facing heightened concerns over the potential further weakening of the Naira as the Federation Account Allocation Committee (FAAC) prepares to disburse revenues among the federal, state, and local governments. Sources within the CBN have revealed fears that funds from FAAC allocations are being illegally converted to dollars by some state governors in the unofficial market, leading to adverse effects on the Naira’s value.

In response to the Naira’s free fall, the CBN has recently implemented various strategies to address supply constraints in the official market. This includes blocking the online platforms of several crypto firms, including Binance, to prevent what the government perceives as the manipulation of the forex market and illicit fund movements.

The FAAC is governed by Section 165 of the Nigerian constitution and the Allocation of Revenue Act No.1 1982, which mandate the disbursement of government revenues into the federation account for monthly distribution among the three tiers of government. The FAAC committee, comprising representatives from states and federal agencies, oversees this process.

Despite efforts to stabilize the Naira, intelligence reports indicate that the currency depreciates whenever FAAC allocations are shared among all tiers of government. There are allegations that some governors convert large sums of Naira to dollars in the black market during FAAC disbursements. This practice, authorities believe, destabilizes the foreign exchange market.

To address these challenges, the National Security Adviser has directed law enforcement agencies to take firm measures against anyone engaged in foreign exchange market speculation. The CBN and security agencies are collaborating to safeguard Nigeria’s foreign exchange market and combat speculative activities that undermine economic stability.

As the FAAC meeting approaches, security agencies have been alerted to monitor activities in the foreign exchange market closely. This proactive approach aims to prevent actions that could further weaken the Naira.

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