Femi Otedola, a prominent billionaire businessman and also the chairman of FBN Holdings, has voiced his support for the 70% windfall tax proposed by the Federal Government on banks’ foreign exchange gains.
Otedola criticized the banking sector for the estimated $50 million bill they incur for private jets’ maintenance, along with an even higher spending on jet acquisitions.
In a recent move, the Senate amended the Finance Act to introduce a 70% windfall tax targeting the foreign exchange profits of banks.
A windfall tax is a measure by the government to impose higher taxes on sectors or businesses that have excessively profited from favorable market conditions.
President Bola Tinubu highlighted that this tax revenue would contribute to funding the N6.2 trillion supplementary budget.
Otedola stated, “I strongly endorse the enforcement of a windfall tax in Nigeria to promote a fairer economic environment.
“This strategic move aligns with the ongoing efforts to reform the Nigerian banking sector, focused on enhancing economic stability and integrity in our financial institutions. Windfall taxes are crucial in ensuring a more equitable distribution of wealth, particularly when certain entities benefit disproportionately from unforeseen profits.”
He emphasized that the revenue generated through windfall taxes could be allocated to essential public services like healthcare, education, and infrastructure, benefiting the populace and mitigating social inequalities.
“The recent introduction of a windfall tax on the extraordinary profits made by Nigerian banks marks a significant step towards achieving these objectives.
The consolidation of different foreign exchange rate systems into a singular investors and exporters (I&E) window led to the devaluation of the Naira and substantial increments in the value of bank assets denominated in US Dollars.
“These extraordinary gains should be channeled towards critical infrastructure development, education, healthcare accessibility, and welfare programs to alleviate the financial burden faced by many Nigerians,” he remarked.
Otedola, who also chairs Geregu Power, highlighted that manufacturing, telecoms, and SMEs may struggle to pay corporate taxes for the coming two years due to negative equity, stressing the need for government support for these entities.
Regarding banks’ lavish spending on private jets, Otedola criticized the trend, indicating a shift is required within the banking sector. He expressed concern over bank executives prioritizing personal gain over their responsibilities to stakeholders and customers, emphasizing the importance of upholding banking values of trust, integrity, and service.
“Nigerian banks are reportedly allocating around $50 million annually for private jet maintenance and have collectively spent over $500 million on acquiring nine jets. This extravagance undermines public trust in financial institutions and diverts resources from critical areas like operational efficiency and customer service.”
He urged banks to regain customer trust by realigning their financial priorities, focusing on enhancing customer service and technological infrastructure.
Otedola commended the recent recapitalization move in the banking sector, stating, “This initiative aims to fortify the sector’s capacity to support Nigeria’s economic progress. Banks should prioritize operational efficiency, technological advancements, and customer service instead of executive extravagance.”