Femi Otedola, Chairman of FBN Holdings and a key player in the financial and capital markets, has attributed the decline in the value of the Naira and the significant appreciation of US Dollar-denominated bank assets to the consolidation of various foreign exchange rate systems into a single Investors' and Exporters' (I&E) window.
In a statement released on Wednesday, Otedola expressed his full support for the introduction of a windfall tax in Nigeria, which he said would contribute to a more equitable and sustainable economic environment.
This endorsement is in line with the ongoing efforts to reform the Nigerian banking sector, aimed at promoting economic stability and integrity in the country's 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.
However, the businessman explained that the revenue generated from windfall taxes can be channeled into essential public services such as healthcare, education, and infrastructure, benefiting all citizens and helping to reduce social inequalities.
He stated that the recent announcement of a windfall tax on the extraordinary profits earned by Nigerian banks is a significant first step towards achieving these goals.
He said, "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 explained that the financial statements of manufacturing, telecoms, and small and medium-sized enterprises (SMEs) indicate that many of these companies may not be able to pay corporate tax for at least the next two years, as they are currently showing negative equity.
He stated that it was necessary and essential for the government to step in and provide support to bridge these gaps, ensuring revenue generation and fostering economic development.
"The importance of aligning financial priorities with Nigeria's broader economic development goals cannot be overstated. The Federal Government's reforms are both timely and essential for the sustainable growth of our economy.
"By taking decisive action to implement these changes, the Federal Government is demonstrating a commitment to ethical leadership and accountability. These reforms will empower our banking sector to play a pivotal role in driving Nigeria's economic development, ultimately securing a prosperous future for all Nigerians," he said.
