The Speaker of the House of Representatives, Abbas Tajudeen, has withdrawn the Counter Subversion Bill and other related draft legislations following widespread public concern.

The decision, announced in a press statement issued by the Special Adviser on Media and Publicity to the Speaker, Musa Krishi, on Wednesday was said to have come after extensive consultations with various stakeholders and a careful assessment of the nation’s current circumstances.

The Counter Subversion Bill, which was introduced on July 23, 2024, sparked public debate and raised concerns about its potential impact on civil liberties.

The statement read, “In response to the voices and concerns of the people, the Speaker of the House of Representatives, Abbas Tajudeen, has decided to withdraw the Counter Subversion Bill and other related draft legislation.

“His decision to withdraw the bill reflects his commitment to ensuring that the House of Representatives remains a true representation of the people’s will.”

Krishi noted that the withdrawal of the bill underscores Tajudeen’s pledge to never support any legislation that could potentially disrupt the peace and unity of the nation.

“Speaker Abbas Tajudeen, a champion of the people’s interests, has always prioritised listening to the citizens and fostering unity. His decision reflects his commitment to ensuring that the House remains truly the People’s House.

“He acknowledges the significance of the concerns raised and the attention the Bill has garnered, reaffirming that he will never support any action that might disrupt the peace and unity of our nation.

“The public is hereby notified of the withdrawal of the Counter Subversion Bill and other related ones introduced on July 23, 2024,” he added.

The Counter Subversion Bill 2024 went viral on social media on Tuesday after it scaled through the first reading and proceeded to the second, where its general principles would be debated on July 23.

It aims to impose stringent penalties on Nigerians who fail to recite the newly approved national anthem or abuse politicians or community leaders.

According to the bill, anyone found guilty shall be fined up to N5 million and would face five to 10 years prison sentence or both.

[Punch]

The newly sworn-in Head of the Civil Service of the Federation (HoSF), Mrs Didi Esther Walson-Jack, has promised to build and improve on the foundation laid by her predecessor, Dr. Folasade Yemi-Esan.

She made this known on her assumption of duty, where she was received by Permanent Secretaries along with Directors and Staff on Wednesday 14, 2024 in Abuja.

“I will work assiduously to escalate ongoing reform initiatives in the Service, deliver on the Mandates of the Office, in sync with the Renewed Hope Agenda of the present Administration”, she vowed.

She thanked President Bola Ahmed Tinubu for the appointment and expressed her commitment to maximizing the use of technology to drive transformation in the Service.

“I intend to maximize the usage of technology in driving transformation in the Service, it is uncompromisable,” she said.

Mrs. Walson-Jack also urged staff to be more proactive in their service delivery, saying

Earlier, the Permanent Secretary, Common Services Office, Mr. Raymond Omachi, assured the HoSF of staff commitment to duty and absolute loyalty to the system.

The HoSF was received by Permanent Secretaries, Directors, and Staff on Wednesday, August 14, 2024, in Abuja

[Vanguard]

The 2024 Paris Olympics Games ended on Sunday in a blaze of glory. The French gave their elevated understanding of beauty and creativity while Hollywood gave a little snippet of what awaits the world in Los Angeles in four years’ time.

The Olympics wasn’t just about games, it was about doggedness and discipline, it was about the capacity of humanity to push the body beyond human elasticity and achieve results beyond the attainment of ordinary humans, it was about people who wanted to put their names in the stars and affect human memory ever after.

Nigerians are aghast that no athlete from the Nigerian team made it to the podium, after N12bn spent on just over 80 of them, belatedly. Some Nigerians did though, they came with the rest of the world where their talents were oiled for success. It would have been a major testimony if we won a medal, just any medal. The journey of failure remains the superstructure of our daily existence, especially at the level of governance.

All the while, watching the Nigerian contingent in Paris reminded me of the Beijing 2008 Summer Olympics, not because of the sprint master, Usain Bolt or the American swimmer that enjoys water more than fish, Michael Phelps, but because of a peculiar Nigerian story which ace sports journalist, Onochie Anibeze, we fondly call coach, shared with us.

According to the story, it was time for Nigeria to do a particular race and organisers were calling former Nigerian sprinter, Innocent Egbunike, to come and prepare his team. Unfortunately, Egbunike came with the American contingent, not Nigeria’s and therefore would not be able to do anything for Nigeria at the time. We just needed somebody to organise them, the organisers informed, because they will get on the field and won’t have their things properly put together, their jerseys may not be of the same colour. Several Olympics later – London, Rio, Tokyo and now Paris, Nigeria has hit the nadir of sports failure. We hardly disappoint the world.

Not only that, there is something about Nigeria which gives the impression that the world must wait for us to get up and get going. And because the world has no room for tardiness, even very small countries like Saint Lucia with a population of 186, 856 and Botswana, a population of 2, 719, 694, have sprinted ahead of the self-acclaimed giant of Africa that used to dominate in sprint, boxing, weightlifting and football. Nigeria’s population is presently guesstimated at 232, 679, 478. Yes. In everything, we guess. In everything, we joke.

Thank God for D’Tigress and Coach Rena Wakama, the country’s memory at the Olympics would nearly have been obliterated!

Paris only provided a global screen for the world to look at our tardiness as a nation. There are things happening in order sectors, that viewed collectively, will nearly run us to the conclusion that this country ain’t going anywhere yet.

At the same time that the Olympics was in full swing in Paris, some Nigerian officials were meeting with representatives of the International Telecommunications Union (ITU) in Abuja. That meeting would have gone unnoticed but for some very little news that filtered out of the meeting location at Mbora in the Federal Capital Territory.

While Nigeria was previously seen as a gold fish in providing regulatory standards for the global community, a new study by the ITU which was presented at the meeting, points to the contrary, requesting the Nigerian government to provide clarity in whom the international community and businesses should deal with because of regulatory overlaps of agencies that seem to be functioning in the same sector.

Some of the agencies identified in the document include but not limted to: Nigerian Communications Commission (NCC), National Information Technology Development Agency (NITDA), National Broadcasting Commission (NBC), National Identity Card Management Commission (NIMC) and National Office for Technology Acquisition and Promotion (NOTAP).

The study, Collaborative regulation: Accelerating Nigeria’s digital transformation, was to help Nigeria prepare for the next phase of growth in the fast expanding digital ecosystem. All of a sudden, a country that used to receive high level invitations to speak at international conferences concerning the exponential growth of its telecommunications industry, has come under the radar, needing help, obviously.

“For over twenty years, ITU and our partners in the wilder global regulatory community have made enormous progress in analysing, mapping and understanding the evolving role that regulation plays in society and in economies. Through this effort, we now have a clear-eyed view of the path ahead for all countries, no matter where they are, in their journey towards fifth generation collaborative digital regulation, or G5, that has emerged as the gold standard for regulators and policy makers seeking to promote an enabling environment for digital transformation. The G5 framework marks a shift of scope beyond a narrow consideration of telecommunications/ICT to a far broader one of each country’s readiness to exploit a fully enabled digital economy and society,” said Dr Cosmas Luckyson Zavazava, Director, Telecommunications Bureau (BDG), International Telecommunications Union (ITU), as he explained some of the activities of his organisation.

The study points out some level of unwieldiness and contradictions in the entire ecosystem that need to be addressed urgently if Nigeria is to rise beyond the level of old glory to attain new heights.

The study also observes that “there is currently a proposed NITDA Amendment Bill (2022), which is expected to repeal the 2007 Act. An overriding objective of the NITDA Amendment Bill is “to create an effective, impartial, an independent regulatory framework for the development of the Nigerian information technology sector and support the develoment of the digital economy” including through promoting access, research, consumer protection, and innovation, amongst others.

In proposing a clear approach towards G5 regulation, the study suggests that “the institutional frameworks should support role clarity, policy coherence, and lean governance. While responsibility for digital transformation at the federal level is shared between the Federal Ministry of Communications and Digital Economy agencies (such as NCC, NBC and NITDA), there are a large number of other government agencies that impact digital transformation and e-government implementation, which leads to issues of responsibility overlaps and ineffective coordination. In instances where there are overlaps, gaps or lack of clarity, as in the case of NCC and NITDA, there is a need to clarify uncertainty, take steps to reduce forum shopping, and address ineffective policy implementation,” the document stated.

Interestingly, the study predates the National Digital Economy and E-Governance Bill 2024, introduced by current minister of the Communications, Innovation and Digital Economy, Dr Bosun Tijani. The Bill is described as an Act to enable the growth of Digital Economy and digital governance in Nigeria.

Under the APC administration, two Bills have been introduced into the digital ecosystem, the NITDA Amendent Act 2022 by Isah Pantami and the recent one by his successor. They must have their reason that concentrates efforts on Bill making to harvest the fortunes of what seems a ready made industry. That is what they call low hanging fruits.

Beyond the superficial good intentions are the subterranean plans that polarise the agencies and industry and make them easy targets for a ministry and supervising ministers whose intentions are difficult to justify. The Bills seek to whittle down the regulatory powers of existing agencies and subordinate them to the whims of new laws being dressed up at the National Assembly. Bosun’s National Digital Economy and E-Governance Bill, actually suggests that only the Nigerian constitution will take precedence over the Bill when passed. Were the National Assembly to go beyond superficiality, they will throw the Bills away, or at best, hammer them into shapes that will enable them function justifiably in their respective fields.

Without doubt there is growing confusion in a sector that was examplary in the past. The ITU which promoted Nigeria as a model of good regulatory jurisdiction, has, in the study, asked the Nigerian government to make intervention that can restore the industry back to its glory days and position it for the digital opportunities ahead.

Chidimma Adetshina, the embattled Miss South Africa contestant, has accepted an invitation to compete in the 2024 Miss Universe Nigeria pageant.

Chidinma was recently subject to controversies over her eligibility to participate in this year’s Miss South African beauty pageant.

The controversy surrounding her nationality rapidly gained traction on social media platforms last month after she qualified for the round of 16. Some X users — predominantly from South Africa — had called for her disqualification.

The South African ministry of home affairs also launched an investigation to determine the nationality of Chidimma.

Following the investigation, the model of Nigerian heritage pulled out from the final of the Miss South Africa pageant which was held on August 10.

The organisers of Miss Universe Nigeria would later invite Chidimma to participate in this year’s pageant.

On Wednesday, Chidimma revealed her decision to accept the invitation for the 2024 Miss Universe Nigeria pageant.

The 23-year-old model expressed excitement that she will be participating in what she described as “Africa’s most prestigious” pageant.

Chidimma also thanked the organisers for allowing her to take part in the pageant.

“With great excitement, I have decided to participate in the Miss Universe Nigeria 2024 beauty pageant,” she said in social media post shared by Ben Murray-Bruce, the founder of Silverbird Group, the pageant organisers.

“Now, I understand the expectations and responsibilities that come with this title and I’m so excited to be back on this journey.

“I just want to say thank you so much for this opportunity and I’m looking forward to participating in Africa’s most prestigious beauty pageant, Miss Universe Nigeria.”

Chidimma was born in Soweto, South Africa. She is believed to be of Nigerian (dad) and Mozambican (mum) heritage.

Last week, the Department of Home Affairs (DHA) for South Africa alleged that preliminary evidence suggests Chidimma’s mother may have committed fraud and identity theft.

Chidimma said her decision to withdraw from the country’s competition was for the “safety of my family and I”.

[TheCable]

I comply with the 80 kph speed limit on the Third Mainland Bridge (TMB or the Bridge). The fact is that I really don’t see an alternative to compliance. My past experience on the TMB has been that, like me, a couple of motorists obeyed the speed limit. Yesterday was, however, different. Every vehicle on the Adeniji-Adele bound lane overtook me, even the bus drivers with their rickety buses! I checked my speedometer intermittently to be sure I was on the right speed.

The first time I saw the 80 kph speed limit on the TMB after it was officially opened, following its comprehensive rehabilitation, I thought, “This is ridiculous! 100 kph will be more like it.” A few times I used the Bridge thereafter, I actually felt I was crawling. However, when I started seeing reports of accidents (some with fatalities) on the Bridge shortly after the opening, I saw the wisdom in the 80 kph speed limit stipulated by the government.

My experience yesterday morning got me thinking about an aspect of human behaviour: the short-term orientation of an average human being. Most of us are simply incapable of factoring the long-term implications of our intended action(s) into our decision-making matrix and allow it to influence our choice of action.

It’s on print and electronic media that speed cameras are on the TMB and erring motorists will be penalized for exceeding the 80 kph speed limit. So far, it is evident that nobody is paying attention. The reason for this is not farfetched. I attribute it to the ‘footnotes’ of the speed campaign, which is that those who disobey the stipulated speed limit will face the consequence when they show up to renew their vehicle licences. That’s the catch! A penalty to be paid sometime in the future doesn’t reckon with us. The Bible actually says, “When a crime is not punished quickly, people feel it is safe to do wrong” (Ecclesiastes‬ ‭8‬:‭11‬ ‭NLT‬‬).

One thing erring motorists on the TMB must note is that LASG means business. The government has only said penalties will be applied, it has not stated the amount. I would not be surprised if the levy is variable depending on the type of car in violation of the speed limit. For instance, I don’t expect a ‘Danfo’ bus owner to pay the same fine as a Range Rover owner. I foresee a ‘progressive fine’ arrangement.

Whatever punitive fine LASG comes up with should not be debated because it is imperative the recklessness on our roads is stemmed, one way or the other. In any case, we would be ‘killing two birds with one stone.’ That is, a heavy fine will hopefully reduce the carnage on the TMB and also be a veritable revenue generating avenue for the government.

As Dr. Folashade Yemi-Esan retires from the civil service after a distinguished career, I wish to publicly commend her for reforming the civil service and leaving behind a legacy of professionalism.

Dr. Folashade Yemi-Esan’s tenure as Head of Service stands as a testament to exceptional leadership and dedication. Her remarkable contributions have left an enduring legacy in the realm of public service, characterised by her dedication and commitment to reform, efficiency and integrity.

In addition to running an effective civil service, Dr. Yemi-Esan championed the whistle blower policy in the civil service, thereby creating an avenue for citizens to report any maladministration in the civil service. I particularly note that every time I reached out to Dr. Yemi-Esan over corrupt or sharp practices by civil servants, she availed me her time and resolved all issues I brought to her attention.

 As we reflect on Dr. Yemi-Esan’s career, I celebrate her as a paragon of excellence and dedication, and I believe that her legacy will undoubtedly continue to inspire and guide the civil service in years to come.

DEJI ADEYANJU, ESQ

Sir: I have watched and waited with dismay to see how and when the sudden decision to earmark the age limit of entrants into the university and other tertiary institutions will take place. To my greatest shock, the JAMB registrar said that it is to begin this year.

Following that, the universities have started releasing the dates for their post UTME exam, with the accompanying conditions for eligibility which includes attainment of age 16 by October 2024. Very obnoxious and incredible! Are rules for a game changed in the middle of the game?

The question that JAMB has to answer is if the candidates did not fill their dates of birth in the JAMB form. They did that.

It is then, gross injustice to deny a successful candidate the opportunity to be admitted just because of his/her age when some older candidates failed in the same examination, showing that academic excellence at that stage, is not a function of age. It is generally known that admissions (merit and supplementary) are given from September to January of the following year. It is therefore not realistic to stipulate that only candidates who will be 16 by October be given admission. What will become of those who will clock 16 between November and January?

This SUDDEN policy is not in tandem with the university admission system and will put a good number of candidates at a disadvantage. One wonders what sparked off this sudden decision. Is there a threat somewhere?

Probably, we are copying from some countries as usual. While copying good things is okay, it is also important to do so carefully, considering our peculiarities; after all, such countries have had people like Yasha Asley (in United Kingdom) who started the university at the age of 12; also, the renowned Harvard university does not have any age limit for admission.

If we want to introduce age limit, it will be good to give a minimum of 10 or 12 years before implementation. This is to enable students who are already in the system at a younger age to be out of the system.

While that is ongoing, we should give an age limit for admission into the primary school (as obtains in the United Kingdom for instance) to ensure that the right age is attained at the last year in the secondary school for onward progress to tertiary institution.

This is more logical than what is being done presently. If what has been initiated is upheld, it means that the affected candidates, who passed the UTME, will have to lose their chances and start the struggle afresh; more so, a yawning and unnecessary gap will be created in their academic progress.

 It means that in the secondary and primary schools, the affected pupils will be forced to roam aimlessly after graduation. This is not morally and socially good for our present society. At a time when we are trying to guard our youths from social ills, rendering them idle will expose them to social deviants. This will not augur well for our society.

It is totally incongruous to have an age limit for admission only into the university while there is none for the lower levels of education. The resultant effect on the stakeholders typifies the proverb where one is led out with light into the dark and suddenly, the light is put off. Where does the affected person grope to? I therefore call on the powers concerned to reconsider their decision on the immediate implementation of the age limit policy as it will disjoint the progress of the young lives we are building.

 •Professor Joy Oluchi Uguru,

University of Nigeria, Nsukka

President Bola Tinubu will on Wednesday, August 14, depart Abuja for Malabo, Equatorial Guinea, on a three-day official visit to honour the invitation of President Teodoro Obiang Nguema Mbasogo. 

President Tinubu will meet with the Equatorial Guinean President at the Presidential Villa on arrival, where meetings will be held between the two leaders and agreements, particularly on oil and gas and security, signed. 

The President will be accompanied on the trip by the Minister of Foreign Affairs, Ambassador Yusuf Tuggar, and other members of his cabinet who will be involved in the signing of agreements and review of opportunities to improve bilateral relations. 

Chief Ajuri Ngelale

Special Adviser to the President 

(Media & Publicity) 

In a society where a few live in luxury while many struggle in poverty, it's not surprising that feelings of envy, jealousy, and even resentment arise among the less fortunate towards those who are well-off.

This is particularly true when it comes to banks, which serve as intermediaries, receiving deposits from those with surplus funds and lending them to those in need—for a fee. However, it seems that these deposit money banks are growing wealthier while their customers are becoming poorer, making them easy targets for criticism.

A notable critic is Mr. Femi Otedola, chairman of Geregu Electricity Power Company, who recently expressed concern that around five banks, likely from the top-tier category, have allegedly spent over $500 million on private jets for their executives. Although Mr. Otedola who is the highest individual shareholder of First Bank has made a case that he does not own a private jet but leases one based on his need, the banks, on the other hand, argue that these jets are necessary for their executives to save time, avoiding the delays and inconveniences of commercial flights. They also point out that these jets are often part of leasing pools, generating income for the banks when not in use by their executives. So there is generally a concensus of opioning by both Otedola and jetset bankers about the usefulness of private jets in business facilitation especially with regards to efficient use of time, but wether owning or leasing jets which is the point of divergence may boil down to the preference of individuals and the strategies of the banks.

An analysis of the tension in the financial services sector suggests that the issue of banks making substantial profits while others in society struggle financially is multifaceted. Banks are profit-oriented institutions, primarily focused on delivering returns to their shareholders. During economic downturns, they often become more cautious, reducing lending and taking on less risk, which can worsen economic hardships. This behavior can widen the wealth gap, as bank profits do not typically benefit the broader population, contributing to income inequality.

To address the challenges posed by the banks' significant profits, stricter regulations and policies may be necessary. This could be why an excessive profit or windfall tax has been introduced through the amendment of the Finance Act 2023, which imposes a levy on banks' Foreign Exchange (FX) gains. The tax rate on these gains has been increased from 50 to 70 percent.

This move comes in response to the significant FX income banks generated following the naira's devaluation after the current administration took office.

The new policy has faced initial criticism, particularly from banks that have described it as double taxation. KPMG Nigeria, a tax and audit advisory firm, criticized the 50% windfall tax on banks' foreign exchange revaluation gains recorded in 2023, warning it could lead to legal challenges, as Nigeria's tax policy does not support retroactive taxation.

Similarly, PwC Nigeria raised concerns that the unpredictability of the windfall tax on already reported 2023 profits might deter investment. Prominent lawyer Dr. Olisa Agbakoba also criticized the proposed amendment to the Finance Act, arguing it was poorly conceived and outside the National Assembly's authority. He added that the policy's burden would likely fall on the banks' customers.

While banks, audit firms, and lawyers are opposing the tax, Mr. Femi Otedola, the largest shareholder in First Bank of Nigeria (FBN), has voiced his support, arguing that revenue from windfall taxes could be directed towards essential public services like healthcare, education, and infrastructure, benefiting all citizens and reducing social inequality.

Mr.Tony Elumelu, Chairman of United Bank for Africa (UBA), and Ladi Balogun, CEO of First City Monument Bank (FCMB), also expressed support after meeting with President Bola Tinubu and his economic team, saying that extraordinary income should help alleviate poverty, aligning with the government's intentions.

The Association of National Accountants of Nigeria (ANAN) and the Chartered Institute of Taxation of Nigeria (CITN) have also endorsed the FX Windfall tax on banks. The position was espoused by CITN Chairman, Chief Samuel Agbeluyi.

Despite being swiftly enacted into law, critics argue that effective implementation will be challenging due to the issues they have identified.

In hindsight, proactive Corporate Social Responsibility (CSR) efforts by the banks might have mitigated this situation. Banks have previously engaged in commendable public good projects, such as the renovation of the National Arts Theatre and contributions to the CACOVID initiative during the pandemic, which provided medical care and palliatives to Nigerians.

Based on my experience from other jurisdictions anticipated the FX gains tax, and during the public presentation of my book “Leading From The Streets: Media Interventions By A Public Intellectual 1999-2019” three months ago, I highlighted the large profits banks were declaring while other sectors and most Nigerians were struggling. I suggested that banks could positively impact society by reconsidering some charges, such as waiving fees for alerts and statement printing, as a small but significant sacrifice for the greater good.

“We should recognize the commendable efforts of Corporate Nigeria during the COVID-19 pandemic. Under the leadership of the Central Bank of Nigeria (CBN), banks and major corporations, through the Special Purpose Vehicle (SPV) CACOVID, provided much-needed support to Nigerians, earning widespread praise and reinforcing public confidence in the corporate sector's resilience.”

I expressed the view above on May 8, about three months before the proposal to amend the Finance Act 2023 on July 17, which was passed by the Senate on July 23. If bank owners and managers had followed my advice to lessen the burden on their customers, it's possible the FX gains tax, which is now causing them significant concern, might not have been imposed.
Doing good to members of a society can earn an organization or sector the goodwill of the people in the society or community where they operate. I believe that is the spirit driving Tony Elumelu’s Africapitalism philosophy which is being driven through his Tony Elumelu Foundation, TEF's outreach to Africans with one hundred million dollars ($100m) funding for mentoring and seeding young entrepreneurs. One wonders why a similar concept to help the critical mass of Nigerians in one way or the other was not copied by the financial services sector or the Bankers Committee.
Take for instance the Dangote group which has made concerted efforts to support the most vulnerable in our society by offering them sucor through food supply outreach nationwide.

I am aware that the anticipated revenue from the FX tax is intended to partially fund the 2024 national budget deficit of N9.18 trillion, with N6.2 trillion expected to come from the windfall bank tax to help reduce the deficit. This supplementary budget, intended for infrastructure, education, and other critical areas, was passed by the National Assembly alongside the amendment of the Finance Act 2023, which imposed a 70% tax on FX gains—now part of the Finance Act 2024—along with penalties for non-compliance, including three years of imprisonment and a 10% fine.

However, many economists believe that taxing capital gains is inefficient. The dilemma is that without taxing capital gains, people might shift taxable income into this category. This creates a complex situation: if our banks are overly taxed, they might lose their competitive edge internationally, especially as they expand across Africa and generate foreign exchange for the country. This makes the tax a tricky issue.

In "Das Kapital," Karl Marx explores the consequences of the rich and the poor coexisting in society without balance. He argues that society is divided into two main classes: the bourgeoisie (the rich) and the proletariat (the poor). Marx believed the bourgeoisie exploited the proletariat by paying them less than the value of their labor, generating profits for themselves. In modern Nigeria, given the large profits banks are reporting, they could be seen as the bourgeoisie, extracting value from the Nigerian banking public, who resemble the proletariat. This concentration of wealth among banks supports Marx's view that capitalism leads to wealth concentration in the hands of a few, while the majority remain poor and powerless, potentially leading to unrest.

We saw a glimpse of such unrest during the naira redesign exercise introduced by the CBN in 2022/23, which caused a severe naira shortage. Bank managers hoarded the currency in their vaults, selling it at a premium resulting in some bank branches being set on fire and bankers scampering into safety by scaling high walls. Public anger was also directed at P.O.S. operators who charged high fees for naira withdrawals who were physically attacked.

I aimed to apply Marx's concepts of exploitation, surplus value, and class struggle to Nigeria's current situation, where the CBN has had to intervene to prevent public anger against banks, bankers, and related services like P.O.S. operators.

Overall, Marx's ideas about the exploitation of the proletariat by the bourgeoisie are relevant to Nigeria's banking system, where banks appear to be profiting significantly while much of the population remains economically marginalized. The naira redenomination exercise and the resulting public anger towards bankers and P.O.S. operators highlight the tensions between these classes. The CBN might be trying to diffuse this tension through the profit tax on banks, which is now causing discomfort for financial institutions, especially deposit money banks.

The banks' difficulties are compounded by the timing of this policy, which coincides with a new CBN recapitalization requirement. Banks must now increase their capital base to N500 billion for an international license and N200 billion for a national license, prompting them to scramble to raise funds from the Nigerian public, who are currently facing high inflation nearing 40%.

Adding to the challenges, the CBN has issued a directive that all funds in dormant accounts must be transferred to the CBN for safekeeping. Faced with multiple policies that could harm the financial services sector, bankers suspect malice from ex-bankers now leading the Ministry of Finance and the CBN, specifically Wale Edun, Minister of Finance, and Yemi Cardoso, CBN Governor. These policies are seen as stripping banks of idle funds in dormant accounts and windfall money that could have supported their recapitalization efforts.

This suspicion is intriguing, especially since the CBN allowed banks to report their FX windfall in their 2023 annual accounts before implementing the FX gains tax policy. It feels like a trap, particularly because banks had no warning, despite two of the four deputy governors, Philip Ikeazor and Emem Usoro, coming from the banking sector. It seems the era of a secretive CBN governor, where financial institutions must closely watch for signals, has returned.

This secretiveness, common in the U.S., where understanding the Federal Reserve Bank governor's next move is an art, appears to have taken hold in Nigeria. A host of financial analysts is now trying to decipher the CBN's actions.

Given these circumstances, the windfall FX gains tax can be seen as a strategic, albeit controversial, move that could have a significant impact if fully implemented.

Notably, windfall profit taxes on certain sectors due to extraordinary profits from favorable policy changes are not unprecedented. For instance, in 1981, British Prime Minister Margaret Thatcher's finance minister, Geoffrey Howe, imposed a windfall tax on banks that made excess profits, raising about £400 million through a 2.5% surcharge on non-interest-bearing current account deposits. Similarly, in 2020, Chancellor Rishi Sunak imposed a bank profits surcharge to raise £2.1 billion for the UK government.

Despite resistance from banks, Thatcher defended the policy, arguing that the banks' large profits were due to government policy, not improved efficiency or service.

In Nigeria, a similar tax on banks is expected to generate about N6.2 trillion, contributing to the increase of the 2024 appropriation to N35.055 trillion after the National Assembly's amendment of the act. European countries like Spain and Italy have also imposed windfall taxes on oil companies following a 40% increase in prices due to the ongoing Russia-Ukraine war.

In the United States, the Windfall Profit Tax (WPT) was enacted in 1980 as part of a compromise between the Carter Administration and Congress over the decontrol of crude oil prices, following price controls implemented by President Nixon from 1971 to 1980.
The bottom line is that the banking sector may become sturdier and more robust if the capital base for an international licenses is increased to N500 billion and N200 billion for a national licenses as directed by the CBN. That would enhance the capacity of the Nigerian economy to grow to become a one-billion-dollar one as envisaged by the incumbent administration.
The last time bank consolidation occurred in Nigeria was in 2005, and the number reduced from 87 to 25 after undergoing consolidation via mergers and acquisitions.
Will the number of banks shrink further after the ongoing consolidation exercise?
Already, the CBN has approved the gobbling up of an old generation financial institution, Unity Bank Plc by a start-up Providus Bank even as Hallmark Bank was wound down by the apex financial institution.
The Providus/Unity merge minicks the manner in Titan Bank, a very young bank acquired Union Bank, which is one of the oldest regional financial institutions whose origin predates independence and which is in the same age range as Wema Bank, First Bank, and UBA.
Incidentally, UBA had also been acquired by a relatively new Standard Trust Bank in the manner that Titan and now Providus deemed to be babies in banking, acquired grandees such as Union Bank and Unity Bank.
Although, the Titan/Union Bank acquisition/merger is currently caught up in controversy, the Standard Trust Bank/UBA deal merger has worked out well for the shareholders who have received more value since the combination.
Is it not amazing that one bank that has remained unchanged in terms of ownership is First Bank? Despite remaining intact and not having been acquired or receiving new funding from new owners, so no dramatic change of management has been forced, it has been pulling its weight by growing organically. As such it has remained amongst the tier 1 banks in Nigeria.
The bottom line is that with banks being better capitalized would the high interest rates charges synonymous with Nigerian banks be reduced any time soon?
Is the CBN strategizing on how to achieve that objective of a regime of interest charges dropping from its present high of 30% to single digits?
That is perhaps the question that is uppermost in the mind of the banking public in Nigeria.
*How Banks Could Have Avoided the FX Gains Tax Through CSR*
By Magnus Onyibe

In a society where a few live in luxury while many struggle in poverty, it's not surprising that feelings of envy, jealousy, and even resentment arise among the less fortunate towards those who are well-off.

This is particularly true when it comes to banks, which serve as intermediaries, receiving deposits from those with surplus funds and lending them to those in need—for a fee. However, it seems that these deposit money banks are growing wealthier while their customers are becoming poorer, making them easy targets for criticism.

A notable critic is Mr. Femi Otedola, chairman of Geregu Electricity Power Company, who recently expressed concern that around five banks, likely from the top-tier category, have allegedly spent over $500 million on private jets for their executives. The banks, on the other hand, argue that these jets are necessary for their executives to save time, avoiding the delays and inconveniences of commercial flights. They also point out that these jets are often part of leasing pools, generating income for the banks when not in use by their executives.

An analysis of this situation suggests that the issue of banks making substantial profits while others in society struggle financially is multifaceted. Banks are profit-oriented institutions, primarily focused on delivering returns to their shareholders. During economic downturns, they often become more cautious, reducing lending and taking on less risk, which can worsen economic hardships. This behavior can widen the wealth gap, as bank profits do not typically benefit the broader population, contributing to income inequality.

To address the challenges posed by the banks' significant profits, stricter regulations and policies may be necessary. This could be why an excessive profit or windfall tax has been introduced through the amendment of the Finance Act 2023, which imposes a levy on banks' Foreign Exchange (FX) gains. The tax rate on these gains has been increased from 50 to 70 percent.

This move comes in response to the significant FX income banks generated following the naira's devaluation after the current administration took office.

The new policy has faced initial criticism, particularly from banks that have described it as double taxation. KPMG Nigeria, a tax and audit advisory firm, criticized the 50% windfall tax on banks' foreign exchange revaluation gains recorded in 2023, warning it could lead to legal challenges, as Nigeria's tax policy does not support retroactive taxation.

Similarly, PwC Nigeria raised concerns that the unpredictability of the windfall tax on already reported 2023 profits might deter investment. Prominent lawyer Dr. Olisa Agbakoba also criticized the proposed amendment to the Finance Act, arguing it was poorly conceived and outside the National Assembly's authority. He added that the policy's burden would likely fall on the banks' customers.

While banks and audit firms are opposing the tax, Femi Otedola, the largest shareholder in First Bank of Nigeria (FBN), has voiced his support, arguing that revenue from windfall taxes could be directed towards essential public services like healthcare, education, and infrastructure, benefiting all citizens and reducing social inequality.

Tony Elumelu, Chairman of United Bank for Africa (UBA), and Ladi Balogun, CEO of First City Monument Bank (FCMB), also expressed support after meeting with President Bola Tinubu and his economic team, saying that extraordinary income should help alleviate poverty, aligning with the government's intentions.

The Association of National Accountants of Nigeria (ANAN) and the Chartered Institute of Taxation of Nigeria (CITN) have also endorsed the FX Windfall tax on banks. CITN Chairman Chief Samuel Agbeluyi noted that windfall taxes, or "prosperity taxes," are not new and have been applied in situations where certain sectors, like telecommunications during COVID-19, performed exceptionally well.

Despite being swiftly enacted into law, critics argue that effective implementation will be challenging due to the issues they have identified.

In hindsight, proactive Corporate Social Responsibility (CSR) efforts by the banks might have mitigated this situation. Banks have previously engaged in commendable public good projects, such as the renovation of the National Arts Theatre and contributions to the CACOVID initiative during the pandemic, which provided medical care and palliatives to Nigerians.

Based on experience from other jurisdictions/climes, I anticipated the FX gains tax, during the public presentation of my book “Leading From The Streets: Media Interventions By A Public Intellectual 1999-2019” three months ago. In that welcome address, I highlighted the large profits banks were declaring while other sectors and most Nigerians were struggling. In light of the above, l suggested that banks could positively impact society by reconsidering some charges, such as waiving fees for alerts and statement printing, as a small but significant sacrifice for the greater good.

“We should recognize the commendable efforts of Corporate Nigeria during the COVID-19 pandemic. Under the leadership of the Central Bank of Nigeria (CBN), banks and major corporations, through the Special Purpose Vehicle (SPV) CACOVID, provided much-needed support to Nigerians, earning widespread praise and reinforcing public confidence in the corporate sector's resilience.”

As if l was being prophetic, I expressed the view above on May 8, about three months before the proposal to amend the Finance Act 2023 on July 17, which was passed by the Senate on July 23. If bank owners and managers had followed my advice to lessen the burden on their customers, it's possible the FX gains tax, which is now causing them significant concern, might not have been imposed.

Doing good to members of a society/community can earn an organization or sector the goodwill of the people in the society where they operate. I believe that is the spirit behind Tony Elumelu’s Africapitalism philosophy which is being driven through his Tony Elumelu Foundation, TEF outreach to Africans with one hundred million dollars ($100m) funding for mentoring and seeding young entrepreneurs. One wonders why a similar concept to help the critical mass of Nigerians in one way or the other was not copied by the financial services sector or the Bankers Committee in Nigeria. That is what self-regulation is about.
Take for instance the Dangote Group which has made concerted efforts to support the most vulnerable in our society by offering them sucor through distribution of food (rice)to the indigent nationwide.
Contrast the image of the Dangote Group five (5) years ago, and one can see the difference from when it was highly vilified for its trucks being a menace to the road users to the present situation where those public officers in NNPC Ltd condemning products from Dangote Refinery can be lynched by a Dangote loving mob for what they consider unpatriotic and intransigent behavior.
Such is the power of image burnishment which can change negative to positive perception and it can be applied be individuals, corporates and governments as well with superlative outcomes such as the Tony Elumelu and Aliko Dangote outcome.

I am aware that the anticipated revenue from the FX tax is intended to partially fund the 2024 national budget deficit of N9.18 trillion, with N6.2 trillion expected to come from the windfall bank tax to help reduce the deficit. This supplementary budget, intended for infrastructure, education, and other critical areas, was passed by the National Assembly alongside the amendment of the Finance Act 2023, which imposed a 70% tax on FX gains—now part of the Finance Act 2024—along with penalties for non-compliance, including three years of imprisonment and a 10% fine.

However, many economists believe that taxing capital gains is inefficient. The dilemma is that without taxing capital gains, people might shift taxable income into this category. This creates a complex situation: if our banks are overly taxed, they might lose their competitive edge internationally, especially as they expand across Africa and generate foreign exchange for the country. This makes the tax a tricky issue.

In "Das Kapital," Karl Marx explores the consequences of the rich and the poor coexisting in society without balance. He argues that society is divided into two main classes: the bourgeoisie (the rich) and the proletariat (the poor). Marx believed the bourgeoisie exploited the proletariat by paying them less than the value of their labor, generating profits for themselves. In modern Nigeria, given the large profits banks are reporting, they could be seen as the bourgeoisie, extracting value from the Nigerian banking public, who resemble the proletariat. This concentration of wealth among banks supports Marx's view that capitalism leads to wealth concentration in the hands of a few, while the majority remain poor and powerless, potentially leading to unrest.

We saw a glimpse of such unrest during the naira redesign exercise introduced by the CBN in 2022/23, which caused a severe naira shortage. Bank managers hoarded the currency in their vaults, selling it at a premium incurring the wrath of the masses who set some bank buildings on fire. Public anger was also directed at P.O.S. operators who charged high fees for naira withdrawals as they were physically attacked.

I aimed to apply Marx's concepts of exploitation, surplus value, and class struggle to Nigeria's current situation, where the CBN has had to intervene to prevent public anger against banks, bankers, and related services like P.O.S. operators.

Overall, Marx's ideas about the exploitation of the proletariat by the bourgeoisie are relevant to Nigeria's banking system, where banks appear to be profiting significantly while much of the population remains economically marginalized. The naira redenomination exercise and the resulting public anger towards bankers and P.O.S. operators highlight the tensions between these classes. The CBN might be trying to diffuse this tension through the profit tax on banks, which is now causing discomfort for financial institutions, especially deposit money banks.

The banks' difficulties are compounded by the timing of this policy, which coincides with a new CBN recapitalization requirement. Banks must now increase their capital base to N500 billion for an international license and N200 billion for a national license, prompting them to scramble to raise funds from the Nigerian public, who are currently facing high inflation nearing 40%.

Adding to the challenges, the CBN has issued a directive that all funds in dormant accounts must be transferred to the CBN for safekeeping. Faced with multiple policies that could harm the financial services sector, bankers suspect malice from ex-bankers now leading the Ministry of Finance and the CBN, specifically Wale Edun, Minister of Finance, and Yemi Cardoso, CBN Governor. These policies are seen as stripping banks of idle funds in dormant accounts and windfall money that could have supported their recapitalization efforts.

This suspicion is intriguing, especially since the CBN allowed banks to report their FX windfall in their 2023 annual accounts before implementing the FX gains tax policy. It feels like a trap, particularly because banks had no warning, despite two of the four deputy governors, Philip Ikeazor and Emem Usoro, coming from the banking sector. It seems the era of a secretive CBN governor, where financial institutions must closely watch for signals, has returned.

This secretiveness, common in the U.S., where understanding the Federal Reserve Bank governor's next move is an art, appears to have taken hold in Nigeria. A host of financial analysts is now trying to decipher the CBN's actions.

Given these circumstances, the windfall FX gains tax can be seen as a strategic, albeit controversial, move that could have a significant impact if fully implemented.

Notably, windfall profit taxes on certain sectors due to extraordinary profits from favorable policy changes are not unprecedented. For instance, in 1981, British Prime Minister Margaret Thatcher's finance minister, Geoffrey Howe, imposed a windfall tax on banks that made excess profits, raising about £400 million through a 2.5% surcharge on non-interest-bearing current account deposits. Similarly, in 2020, Chancellor Rishi Sunak imposed a bank profits surcharge to raise £2.1 billion for the UK government.

Despite resistance from banks, Thatcher defended the policy, arguing that the banks' large profits were due to government policy, not improved efficiency or service.

In Nigeria, a similar tax on banks is expected to generate about N6.2 trillion, contributing to the increase of the 2024 appropriation to N35.055 trillion after the National Assembly's amendment of the act. European countries like Spain and Italy have also imposed windfall taxes on oil companies following a 40% increase in prices due to the ongoing Russia-Ukraine war.

In the United States, the Windfall Profit Tax (WPT) was enacted in 1980 as part of a compromise between the Carter Administration and Congress over the decontrol of crude oil prices, following price controls implemented by President Nixon from 1971 to 1980.
The bottom line is that the banking sector may become sturdier and more robust if the capital base for international licenses is increased to N500 billion and N200 billion for national licenses as directed by the CBN. That would enhance the capacity of the Nigerian economy to grow to become a one-billion-dollar one as envisaged by the incumbent administration.
The last time bank consolidation occurred in Nigeria was in 2005, and the number reduced from 87 to 25 after undergoing consolidation via mergers and acquisitions.
Will the number of banks shrink further after the ongoing consolidation exercise?
Already, the CBN has approved the gobbling up of an old generation financial institution, Unity Bank Plc by a start-up Providus Bank even as Hallmark Bank was wound down by the apex financial institution.
The Providus/Unity merge minicks the manner in Titan Bank, a very young bank acquired Union Bank, which is one of the oldest regional financial institutions whose origin predates independence and which is in the same age range as Wema Bank, First Bank, and UBA.
Incidentally, UBA had also been acquired by a relatively new Standard Trust Bank in the manner that Titan and now Providus deemed to be babies in banking, acquired grandees such as Union Bank and Unity Bank.
Although, the Titan/Union Bank acquisition/merger is currently caught up in controversy, the Standard Trust Bank/UBA deal merger has worked out well for the shareholders who have received more value since the combination.
Is it not amazing that one bank that has remained unchanged in terms of ownership is First Bank? Despite remaining intact and not having been acquired or receiving new funding from new owners, so no dramatic change of management has been forced, it has been pulling its weight by growing organically. As such it has remained amongst the tier 1 banks in Nigeria.
The bottom line is that with banks being better capitalized would the high interest rates charges synonymous with Nigerian banks be reduced any time soon?
Is the CBN strategizing on how to achieve that objective of a regime of interest charges dropping from its present high of 30% to single digits?
That is perhaps the question that is uppermost in the mind of the banking public in Nigeria.

Magnus Onyibe, an entrepreneur, public policy analyst, author, democracy advocate, development strategist, an alumnus of Fletcher School of Law and Diplomacy, Tufts University, Massachusetts, USA, and a former commissioner in Delta state government, sent this piece from Lagos, Nigeria.
To continue with this conversation and more, please visit www.magnum.ng

The Nigerian stock market is up roughly 31% this year and is in a bull run despite the country’s tough economic climate.

Thanks to technology, investing in Nigerian stocks is more accessible and transparent. 

A dozen or so listed businesses on the NGX have a market capitalization of at least N1 trillion, including Airtel Africa, BUA Cement, Dangote Cement, FBN Holdings, MTN Nigeria, BUA Foods, Seplat, GTBank, Zenith, UBA, Transpower, and Geregu. 

NGX data also confirms that the wealthiest men in Nigeria—Aliko Dangote, Femi Otedola, Mike Adenuga, Jim Ovia, Abdul Samad Rabiu, and Tony Elumelu—have significant exposure to the Nigerian stock market. 

Investing is key to growing wealth and keeping up with high inflation and the devaluation of the naira. Oando, priced at N5 a year ago due to regulatory issues and high debt, gained more than 70% this month to close above N44. Investors have made at least N15 trillion this year from their exposure to Nigerian equities. 

The bullish momentum in Nigerian stocks is attributed to favorable financial outcomes and noteworthy policy decisions, including the elimination of fuel subsidies, the unification of exchange rates, the Central Bank of Nigeria (CBN) recapitalization policy, and the cessation of fund allocations to Bureau De Changes (BDCs). 

How to Begin the Journey of Stock Investing in Nigeria 

Brokers are designated to carry out buying or selling orders on behalf of investors. A licensed stockbroker is usually registered with the Nigerian Securities and Exchange Commission (SEC) and is a member of the Nigerian stock market. 

When selecting a stock brokerage firm, it’s important to consider accessibility, affordability (as some require a minimum deposit to open an account), integrity and reputation, and the company’s status (active or inactive) with the SEC. 

You will need an investor account. Retail investors are the only ones who can open personal accounts linked to their names. You will need to submit proof of identity, banking details (such as the BVN), a picture of your passport, the account holder’s signature, and, if it’s a personal account, the contact details of your relatives. 

If you have a bank account, opening one takes less than a day. You can trade with some brokers online without visiting their physical offices because they have online trading platforms. Visit their app or portal of interest for additional information. 

Holding Nigerian stocks under a regulated custodian is safe, though you should have a CSCS account attached to an investment account. If a regulated stock brokerage firm goes bankrupt, select another registered stockbroking firm to authorize them to take over your CSCS account. 

Continue to Learn 

Investing in the stock market requires perseverance, long-term planning, and in-depth knowledge of the NGX market cycle. Keep up with Nigerian political and economic developments that could affect the market. Profitability is not guaranteed. 

Experts advise investing money you can afford to lose and being prepared for market swings. Keep learning as much as possible about the markets to advance your investment skills. 

The Nigerian stock market has a shorter market cycle than the American stock market. You can’t just throw money in and expect miracles; that’s why knowledge is critical. Developing analytical skills and emotional intelligence is essential for long-term success. Diversification is a fundamental component of investing. 

Diversification entails distributing your investments among various industries and businesses. Investments can be made in different economic sectors including consumer goods, healthcare, telecommunications, and finance. 

A novice investor should consider the company’s market value. Although large-cap stocks, such as blue-chip stocks and Nigerian banks, are easily bought and sold, mid-cap and small-cap stocks have the potential for higher returns. 

It is highly recommended to read books and other financial news-related materials, such as Bloomberg and Nairametrics, to learn more about Nigerian stocks and stay updated on market developments. Understanding market movements is easier if you know when and how they occur. Your strategy must incorporate risk mitigation techniques like negative balance protection. 

Fundamental and technical analysis can also improve trading profits through informed investment decisions. You can determine the best time to exit a position and the degree of risk involved by knowing when earnings will hit the market. Check the stock chart two to three weeks before the anticipated earnings release date to see if the price is trending higher or recovering from a recent decline. 

Here, you can decide how much to pay and, by taking a cautious stance, determine how many shares to purchase. Invest early and watch the price rise as the expectedly good earnings report brings about an increase in value. Monitor the daily movement of prices. 

In conclusion, both novice and seasoned investors can find substantial investment opportunities in the Nigerian stock market. Making educated investment decisions can be achieved by learning the fundamentals of how the market works, understanding key players, exploring your options, and being aware of the risks. Never forget that it’s a good idea to do extensive research, consult with qualified/licensed experts, and keep up with industry developments. 

[Nairametrics]