Nigerian Banks Need To Breathe As They Recapitalize

The banks are now the small guys: “The Bank Directors Association of Nigeria (BDAN) has raised an alarm over the recent decision by the National Assembly to impose a 70% windfall tax on foreign exchange (FX) revaluation gains by Nigerian banks, calling on the lawmakers to revisit the legislation. BDAN, representing the collective voice of bank directors across Nigeria, expressed its concerns following a meeting where the implications of the newly amended finance act were thoroughly discussed. The association described the 70% windfall tax as “excessively burdensome and ill-timed,” particularly in light of the ongoing recapitalization efforts within the banking sector.”

Indeed, you want them to raise more funds from FOREIGNERS and you are retroactively taxing them, thereby making sure those foreigners do not come. In the Igbo Nation, the elders will say that no one uses two legs to stretch at the same time. What they mean there is that most times, things must be sequenced, for the best outcome.

For a bank? Which books are the correct ones? The ones which they have published before the windfall tax or the ones we are expecting as a result of the new tax? You can do that to a farming business or a cement business or an energy business, but when it comes to banking, doing that will trigger many dependencies which may even push some correspondent banks in New York, London, etc to pause certain things UNTIL the correct books are ratified.

Good People, this is banking. The banks need to breathe also even though most do not like them! And how ironic? If the government takes out this tax, would Nigerians expect some of those bank fees to go? We the people also need to breathe from bank fees.

In its statement, BDAN urged the National Assembly to revisit the amendments, calling for constructive dialogue between lawmakers and industry stakeholders. The association emphasized the need for clarity on what exactly constitutes the FX gains to be taxed and raised concerns about how the government plans to address scenarios where banks might incur losses rather than profits from their foreign exchange transactions.

“We respectfully urge the National Assembly to revisit these amendments and engage in constructive discussion,” the statement read.

BDAN’s concerns are not isolated, as many within the financial sector share similar sentiments. The association warned that such a high levy could have long-term negative effects on the industry, potentially deterring investment and innovation, which are crucial for the sector’s development and for maintaining Nigeria’s economic stability.

Nigerian Bank Directors Urge National Assembly to Reconsider 70% Windfall Tax on Banks Amid Recapitalization Struggles

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