Billionaire businessman and Chairman of First Bank of Nigeria Holdings, Femi Otedola, has endorsed the Federal Government’s proposal for a 70 per cent windfall tax on banks’ foreign exchange gains.
According to The PUNCH, in a statement released on Wednesday, Otedola criticized the banking sector for its estimated $50 million annual expenditure on private jet maintenance and an even higher amount spent on the purchase of private jets.
This July, the Senate amended the Finance Act to enforce a 70 per cent windfall tax on banks’ foreign exchange profits.
Windfall tax is an increased tax imposed by the government on industries or businesses that have significantly benefited from favourable market conditions.
President Bola Tinubu indicated that the revenue generated from this tax would contribute to funding the N6.2 trillion supplementary budget.
Otedola asserted, “I write to express my strong support for the implementation of a windfall tax in Nigeria and to highlight the critical role this measure plays in fostering a fairer and more equitable economic environment.”
He continued, “This endorsement aligns with the ongoing efforts to reform the Nigerian banking sector, aimed at enhancing economic stability and integrity within our financial institutions. 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.”
Otedola suggested that the revenue from windfall taxes could be directed towards essential public services like healthcare, education, and infrastructure, thus benefiting all citizens and reducing social inequalities.
“The recent announcement of a windfall tax on the extraordinary profits earned by Nigerian banks is a significant first step towards achieving these goals,” he stated.
The depreciation of the Naira following the consolidation of various foreign exchange rate systems into a single investors and exporters window led to substantial increases in the value of bank assets denominated in U.S. Dollars.
“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,” he added.
As Chairman of Geregu Power, Otedola also noted that financial statements from the manufacturing, telecoms, and SME sectors indicated many may not be able to pay corporate tax for at least the next two years due to negative equity, emphasizing the need for government support for these entities.
Regarding the banking sector’s penchant for private jets, Otedola remarked, “Amid the progress with banking sector reforms, there is an urgent need to address entrenched issues within the Nigerian banking sector. A concerning trend has emerged where some bank chief executives prioritize personal gain over their duty to shareholders and customers. The core values of banking—trust, integrity, and service—must be upheld. I am particularly critical of the culture of flamboyance, especially the ownership and operation of private jets.”
He pointed out that Nigerian banks spend an estimated $50 million annually on private jet maintenance, with over $500 million spent on purchasing nine private jets by four banks, which he argued erodes public trust and diverts resources from operational efficiency, technological innovation, and customer service.
Otedola urged banks to restore customer trust by realigning their financial priorities and investing in customer service and technological infrastructure.
He also praised the recent recapitalisation initiative in the banking sector, saying, “This move is designed to strengthen the banking sector’s capacity to support Nigeria’s broader economic development goals. It is crucial for banks to focus on operational efficiency, technological innovation, and customer service, rather than executive extravagance.”
