When Nigerian President BolaTinubus government devalued the naira last year, only one sector of the economy emerged largely unscathed: the banks.
While manufacturers bemoaned the high cost of inputs and rued decimated consumer spending, banks reaped windfall profits simply by maintaining their currency positions against the naira. Lenders in Nigeria also saw an expansion of their interest income as the monetary authorities raised interest rates to record highs in a bid to tame surging inflation.
The top four banks in Nigeria - Access Bank, Guaranty Trust, Zenith Bank and United Bank for Africa - saw their gross earnings more than double to 8 trillion naira ($4.86bn) in 2023. Pre-tax profit for the four banks rose more than two-fold to 2.9 trillion naira ($1.76bn), according to the results declared for the year. The top ten banks reported annual profits between $75m and $500m equivalent, led by Zenith Bank.
Now the government wants some of that money.
In the Finance Amendment Bill of 2024 sent to lawmakers in July, Tinubu asked for a 50% tax on the foreign exchange gains made by the banks following the devaluation. The funds, according to the bill, were required for infrastructure, education and health projects. Both chambers of parliament have passed the bill, with the Senate raising the tax rate to 70%; the bill now awaits the presidents signature to become law.
