Bank directors disagree with chairmen’s views on windfall tax

The Bank Directors Association of Nigeria have distanced itself from the views of some bank chairmen on the proposed foreign exchange windfall tax.

The Chairman of the association, Mustapha Chike-Obi, who disclosed this via his X (formerly Twitter), noted that BDAN would communicate its views on the issue after its board meeting on August 12.

He said, “I have read the personal views of some bank chairmen on the windfall tax issue. Those views do not represent the banking community. BDAN will communicate its views after our board meeting on the 12th(August), on this and other very important issues concerning our community.”

In the past week, at least three bank chiefs had expressed support for the move by the FG to impose a 70 per cent windfall tax on the foreign exchange earnings of banks from 2023 to 2025.

In a statement on Wednesday, the Chairman of FBN Holdings, Femi Otedola, said that the revenue generated from the forex segments harmonisation policy implemented in June 2023 could be channelled into essential public services, such as healthcare, education, and infrastructure, benefiting all citizens and helping to reduce social inequalities.

He stated, “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’ 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 added that the financial statements of manufacturing, telecoms, and SMEs indicated that many of those companies may not be able to pay corporate tax for at least the next two years, as they were currently showing negative equity.

“It is essential for the government to step in and provide support to bridge these gaps, ensuring revenue generation and fostering economic development,” the bank chief maintained.

Also, after a meeting with President Bola Tinubu, on Wednesday, the Chairman of the United Bank for Africa, Tony Elumelu, reasoned that mutual prosperity was vital to sustaining the system.

He said where businesses thrive, jobs are created, and foreign and local investors benefit, leading to a prosperous society.

“We believe in prosperity, in creating jobs and employment for our people, in democratising prosperity, and in ensuring that Nigerians have access to a good life. So today, we spoke about the Windfall Tax. We support the government.

“We believe that where extraordinary income has made a part of, it should go towards helping to alleviate poverty in the country, which is what the government intends to do. We support that, and we just believe that we should ensure that no one segment suffers, that the government is able to continue to create jobs, and that businesses are also able to do well because we need mutual prosperity,” he declared.

The FCMB Group Chief Executive, Ladi Balogun, in his comments after the meetings, remarked, “The purpose of the meeting was to ensure that this government’s reform agenda is well transmitted to not only the banking sector but also the investment community. We sought to ensure that we were all on the same page.

“We also sought to ensure that we are also playing our role as a banking system and as an industry to channel back some of the gains we have made into the general economy. Now, we believe that this government and this administration are very much pro-investment and pro-growth, and they demonstrated that by listening to the concerns of the industry.”