In a recent statement, Femi Otedola, the Chairman of First Bank Holdings and a billionaire in Nigeria, expressed his approval of the government’s decision to impose a windfall tax on the foreign exchange gains of commercial banks in 2023. He believes this tax will promote more equitable wealth distribution.
Otedola’s endorsement of the tax makes him the first prominent figure in the financial sector in Nigeria to do so.
He also urged banks to refrain from excessive spending on private jets and instead focus on improving operational efficiency and customer service.
Otedola highlighted the necessity for reforms within the Nigerian banking industry to bolster economic stability and integrity.
According to him, “Windfall taxes, which target entities or individuals who unexpectedly make significant profits, play a crucial role in ensuring a fairer allocation of wealth. They compel those who disproportionately benefit to make a more substantial contribution to the overall social welfare.”
Notably, initially proposed by President Bola Tinubu at a 50% rate on banks’ FX profits for 2023, the windfall tax was later increased to 70% by the Senate and has subsequently been enacted into law. This tax measure will be applicable from 2023 to 2025.