In the midst of the ongoing forex crisis in Nigeria, commercial banks are reaping significant profits while manufacturers face losses. Economic experts shed light on this disparity, attributing it to foreign exchange revaluation gains and losses.
Nine commercial banks witnessed a 156.4% increase in profits before tax, reaching N2.3tn in just nine months of 2023, with the bulk coming from foreign exchange-related transactions. In contrast, manufacturing firms like Dangote and BUA reported foreign exchange-related losses totaling N627.7bn in the first quarter of the year.
The Nigerian government introduced a windfall tax on banks’ forex revaluation gains to fund its spending plans, leading to debates within the banking sector. Analysts like Prof Taiwo Owoeye warn against excessive taxation, advocating for a balanced approach to revenue generation.
The disparity between bank profits and manufacturing losses highlights the impact of forex fluctuations on different sectors of the economy. As the government seeks to address this imbalance, the need for careful tax policies becomes crucial for fostering a sustainable economic environment.