Billionaire businessman, Femi Otedola, is in favour of the federal government’s 70% windfall tax on banks’ foreign exchange earnings.
The business mogul disclosed this in a statement on Wednesday admonishing the banking sector for its $50m projected bill on private jets maintenance and an even higher bill on the acquisition of private jets.
A 70% windfall tax on banks’ foreign exchange profits was introduced by the Senate in July as an amendment to the Finance Act.
A windfall tax is a higher tax levied by the government on sectors or businesses that have disproportionately benefited from favourable market conditions.
The money will be utilized as a portion of revenue to pay for the N6.2 trillion supplemental budget, according to President Bola Tinubu.
Otedola argued, “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.
“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.”
He noted that the money raised by windfall taxes might be used to fund infrastructure projects, healthcare, and education, among other vital public services that would benefit all residents and lessen social inequality.
“The recent announcement of a windfall tax on the extraordinary profits earned by Nigerian banks is a significant first step towards achieving these goals.
“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.
“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 said.
Otedola, who is also the chairman of Zenon Oil, emphasized that the financial records of SMEs, telecoms, and the manufacturing sector showed that many of them might not be able to pay corporate tax for the next two years because of their negative equity, making it necessary for the government to intervene and support those organizations.
On the appetite of the banking sector for private jets, Otedola said, “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 prioritise 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.
“Nigerian banks are spending an estimated $50m annually just on maintaining private jets, with over $500m gone into purchasing nine private jets by four banks. This level of extravagance significantly erodes public trust in our financial institutions and diverts crucial resources away from vital areas such as operational efficiency, technological innovation, and customer service.”
He urged the banks to refocus their financial goals and make investments in areas that directly improve customer services and advance technical infrastructure in order to win back the trust of their customers.
