In a significant development, Femi Otedola, Chairman of FirstBank Group, and Tony Elumelu, Chairman of United Bank of Africa (UBA), have expressed their support for the federal government’s new windfall tax on the foreign exchange gains of banks.
The move follows President Bola Tinubu’s request to the National Assembly on July 17 to amend the 2023 Finance Act, imposing a one-time windfall tax on banks’ forex gains.
The National Assembly later increased this tax from the proposed 50 per cent to 70 percent in the amended 2024 Finance Act, sparking concern among financial professionals.
A windfall tax is typically imposed on businesses that have benefited disproportionately from favorable market conditions.
Following a formal meeting with President Tinubu at the State House in Abuja, both Elumelu and Otedola voiced their approval of the tax.
Speaking recently, Elumelu noted that the windfall levy was aimed at poverty alleviation and ensuring prosperity for all Nigerians.
He emphasised the need to “democratize prosperity” and create mutual benefits for businesses, investors, becoming part of the government’s broader effort to reduce poverty.
“We believe that extraordinary income should go towards helping to alleviate poverty in the country, which is what the government intends to do,” Elumelu said.
He stressed the importance of ensuring that no single sector bears the brunt of the tax, advocating for a balance that would enable businesses to thrive while contributing to the greater good.
Otedola, on the other hand, took a more critical stance, calling the windfall tax “long overdue” and openly criticizing banks for what he described as a “culture of flamboyance.”
He highlighted the excessive spending on private jets by some banks, revealing that Nigerian banks collectively spend an estimated $50 million annually on maintaining private jets, with over $500 million already spent on acquiring nine private jets by just four banks.
Otedola condemned this trend, urging banks to return to core banking values of trust, integrity, and service, rather than prioritizing personal gain. His comments have resonated widely, sparking a broader conversation about the responsibilities of financial institutions in Nigeria.
The windfall tax, while controversial, is seen by both businessmen as a necessary step to address economic disparities and support government efforts to create jobs and foster a more equitable society.