President Bola Ahmed Tinubu convened a closed-door meeting with leaders of Nigeria’s commercial banking sector at the State House in Abuja to discuss the newly imposed windfall tax.
The session, led by Finance Minister Wale Edun, included prominent figures such as Tony Elumelu, Chairman of United Bank for Africa, and Ladi Balogun, Group CEO of First City Monument Bank.
The windfall tax, introduced by President Tinubu in mid-July as part of an amendment to the 2023 Finance Act, targets significant foreign exchange gains reported by banks in 2023.
The tax is intended to generate revenue for key infrastructure, education, and healthcare projects under the Renewed Hope Agenda. 
Despite concerns from Moody’s Investors Service and other analysts about the tax’s potential to reduce bank profits and threaten financial stability, the Senate recently passed the amendment.
The bill increased the windfall levy from 50% to 70% and extended its applicability to all profits from foreign exchange transactions through 2025.
Critics argue that the retroactive aspect may lead to legal challenges and discourage future investments, potentially shifting the tax burden to customers.
Briefing State House Correspondents, Edun emphasized the tax reform’s aim to simplify the tax regime by focusing on profits while allowing capital to grow. He said this approach aims to distribute wealth more equitably across Nigerian society.
Edun said, “As we know, the banking system has enjoyed some of what we’ll call windfall or unearned profits and in the interest of distributing wealth across the Nigerian society, the government has stepped in to take some of that wealth on behalf of Nigerians.
“We know at this time that the banking system is raising money. They’re selling shares, giving people the opportunity to participate in their wealth, and that includes foreign investors.
“So it’s against that background that Mr. Elumelu and Mr. Balogun wanted some clarifications, particularly on the windfall levy that has just been passed by the National Assembly.”
During the meeting, the FIRS Chairman Zacch Adedeji elaborated on the government’s plan to streamline the tax process.
He said the reform will “focus on the wealth that is created, not to focus on the companies that are not doing so well, or to focus on their capital, but to leave their capital alone to grow and make sure that the emphasis is on taxing and levying only the returns, only the profits.”
Bankers, including Elumelu and Balogun, sought clarifications on the levy and expressed their support, underscoring their commitment to mutual prosperity, job creation, and poverty alleviation.
Elumelu highlighted the importance of creating jobs and democratizing prosperity, supporting the government’s efforts to alleviate poverty.
On his part, Balogun emphasized the banking sector’s role in aligning with the government’s reform agenda to promote economic growth and investment, expressing confidence in the administration’s pro-growth stance.
He said, “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. I believe we are in the banks and the government.
“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.
“We believe that what we are seeing is a government that will continue to support all stakeholders in this economy and promote economic growth. I believe that was the strongest message that came out today.”
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