Billionaire businessman and chairman of First Bank, Femi Otedola has voiced his strong support for President Bola Tinubu’s proposed windfall tax on banks, while sharply criticizing the lavish spending habits of bank executives.
The billionaire investor’s comments come in response to President Tinubu’s recent push for the Senate to amend the 2023 Finance Act to introduce a windfall tax on foreign exchange gains.
Nigeria’s economy has faced various challenges, including fluctuating oil prices, which significantly impact government revenue.
In response to these fiscal pressures, the government seeks alternative revenue sources to bolster its finances.
While other sectors have struggled, Nigerian banks have reported substantial profits in recent years, partly due to rising interest rates and government policies on foreign exchange.
This profitability has led to scrutiny and the introduction of measures like the windfall tax to ensure a fair share of these earnings contribute to national revenue.
In a statement released to journalists on Wednesday, Otedola expressed strong backing for Tinubu’s policy aimed at imposing a windfall tax on banks’ foreign exchange gains.
“A concerning trend has emerged where some bank chief executives prioritize personal gain over their duty to shareholders and customers,” Otedola remarked.
“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.”
Otedola highlighted the financial impact of such extravagance, stating, “Nigerian banks are spending an estimated $50 million annually just on maintaining private jets, with over $500 million invested in 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.
“To regain the trust of the Nigerian public and fulfil its pivotal role in the nation’s economic development, the banking sector must realign its financial priorities. Investments should be channelled into areas that directly improve customer services and enhance technological infrastructure.”
Otedola emphasised that the tax revenue should be utilized to support essential services such as education, healthcare, and infrastructure, and to address social inequality.
He also expressed concern about the financial stability of other sectors, noting that many telecoms, SMEs, and manufacturing companies are currently showing negative equity and may not be able to pay corporate tax in the near future.
He said, “The government’s urgent intervention is needed to close this gap,” Otedola asserted, adding that he supports the recent banking sector recapitalization initiative, which sets higher capital requirements for banks to strengthen their capacity to support Nigeria’s economic development.
“I also commend the recent recapitalization initiative in the banking sector, which sets minimum capital requirements of N500 billion for international banks and N200 billion for national banks,” he said. “This move is designed to strengthen the banking sector’s capacity to support Nigeria’s broader economic development goals.”
Uncharacteristically, the businessman has made strong public interventions in the economy and development in recent times.
Last week, he weighed in on the dispute between his friend and fellow billionaire, Aliko Dangote, founder of Dangote Refinery, and the Nigerian National Petroleum Company Limited.
He said, “In South Africa, government support for the mining industry has been crucial in maintaining its global competitiveness. Brazil has seen substantial government investment in its agricultural sector, transforming it into one of the world’s leading food exporters.
“In China, government backing for companies like Huawei and Alibaba has propelled them to global leadership in technology and e-commerce. In Nigeria, we have our own titans, and it is imperative that we recognize and support them.
“Aliko Dangote has broken every boundary in worldwide business and industry. His contributions are not just a testament to his brilliance but a beacon of what is possible when vision meets opportunity.
Supporting local champions like Dangote is crucial for our national development and economic independence.”
