Bank Directors Distance Themselves from Chairmen’s Views on Forex Windfall Tax

The Bank Directors Association of Nigeria (BDAN) has formally distanced itself from the individual opinions of certain bank chairmen regarding the proposed foreign exchange windfall tax. Mustapha Chike-Obi, the Chairman of BDAN, made this clear in a statement via his X (formerly Twitter) account, emphasising that the association would articulate its official position following its board meeting on August 12.

Chike-Obi stated, “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 prominent bank chiefs have expressed their support for the Federal Government’s move to impose a 70 per cent windfall tax on the foreign exchange earnings of banks from 2023 to 2025.

In a statement on Wednesday, FBN Holdings Chairman, Femi Otedola, remarked that 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. This, he argued, would benefit all citizens and help reduce social inequalities.

Otedola said, “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 also noted that financial statements from manufacturing, telecoms, and SMEs indicated many companies may not be able to pay corporate tax for the next two years, 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,” he added.

Similarly, Tony Elumelu, Chairman of the United Bank for Africa, after a meeting with President Bola Tinubu, underscored the importance of mutual prosperity to sustain the system. He said, “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 been made, 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.”

Ladi Balogun, Chief Executive of FCMB Group, also shared his thoughts post-meeting, highlighting the need for the banking sector to align with the government’s reform agenda. He commented, “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.”

As the debate continues, BDAN’s forthcoming board meeting on August 12 is anticipated to provide clarity on the association’s stance on the proposed tax, marking a significant moment for Nigeria’s banking community.