Femi Otedola, chairman of FBN Holdings, has voiced his support for the federal government’s implementation of a windfall tax on the foreign exchange (FX) gains of banks.
In a statement on Wednesday, Otedola highlighted that the revenue from this policy could be directed towards crucial public services like healthcare, education, and infrastructure. This would benefit all citizens and help reduce social inequalities.
Otedola emphasized that his endorsement aligns with ongoing efforts to reform the Nigerian banking sector, aiming to enhance economic stability and integrity within the country’s financial institutions.
He explained that windfall taxes are levies on companies or individuals who receive substantial, unexpected profits due to circumstances beyond their usual control or investment. Taxing these extraordinary gains ensures a fairer distribution of wealth, allowing those who benefit disproportionately to contribute more significantly to the broader societal good.
“The recent announcement of a windfall tax on the extraordinary profits earned by Nigerian banks is a significant first step towards achieving these goals,” Otedola said. “The consolidation of various foreign exchange rate systems into a single investors and exporters (I&E) window led to the depreciation of the Naira and substantial increases in the value of bank assets denominated in United States Dollars.”
He added that this extraordinary gain should be redistributed to fund critical infrastructure development, education, healthcare access, and public welfare initiatives, addressing the intense pressure on public finances and alleviating the cost-of-living crisis many Nigerians face.
Otedola also pointed out that the financial statements of manufacturing, telecoms, and SMEs indicate that many of these companies may not be able to pay corporate tax for at least the next two years due to showing negative equity. Therefore, it is essential for the government to provide support to bridge these gaps, ensuring revenue generation and fostering economic development.
“Nigerian banks are spending an estimated $50 million annually just on maintaining private jets, with over $500 million gone into purchasing nine private jets by four banks,” Otedola noted, criticizing the extravagance within the banking sector.
He stressed that the federal government’s reforms are timely and essential for the sustainable growth of Nigeria’s economy. By implementing these changes, the government is demonstrating a commitment to ethical leadership and accountability.
“These reforms will empower our banking sector to play a pivotal role in driving Nigeria’s economic development, ultimately securing a prosperous future for all Nigerians,” Otedola stated.
He also praised the recent recapitalisation initiative in the banking sector, which sets minimum capital requirements of N500 billion for international banks and N200 billion for national banks. He believes this move was designed to strengthen the banking sector’s capacity to support Nigeria’s broader economic development goals.
Otedola urged banks to focus on operational efficiency, technological innovation, and customer service instead of executive extravagance. He criticized some bank executives for prioritizing personal gain over their duty to shareholders and customers, stressing that the core values of banking—trust, integrity, and service—must be upheld.
To regain public trust and fulfill its pivotal role in the nation’s economic development, the banking sector must realign its financial priorities, Otedola asserted. Investments should be channeled into areas that directly improve customer services and enhance technological infrastructure.
He called on all stakeholders in the Nigerian banking sector and the broader economic community to support these visionary reforms, urging financial institutions to embody the highest standards of integrity and service to ensure a stronger, more resilient economy for all Nigerians.
