Manufacturers and Brand owners under the umbrella of the Manufacturers Association of Nigeria (MAN) have called on the federal government to reconsider the new expatriate employment levy (EEL) introduced a few weeks ago. The body sees the imposition of EEL as a threat that may hurt the manufacturing sector and the economy.
Commenting on the issue, Segun Ajayi-Kadir, Director-General of the Manufacturers Association of Nigeria (MAN) said, “This will in turn mark an unwarranted and unprecedented addition to the cost of doing business in Nigeria, especially to manufacturers.”
The manufacturing sector is already beset with multidimensional challenges. In the year 2023, 335 manufacturing companies became distressed, and 767 shut down.
According to Ajayi-Kadir, the capacity utilisation in the sector has declined to 56 per cent; the interest rate is effectively above 30 per cent; foreign exchange to import raw materials and production machine inventory of unsold finished products has increased to N350 billion and the real growth has dropped to 2.4 per cent.
He further stated that Expatriates in Nigeria currently pay more than $2000 for a Combined Expatriate Residence Permit And Aliens Card (CERPAC). The sector cannot afford another disincentive to increased investment and portfolio expansion.
In a related development, the Lagos Chamber of Commerce and Industry (LCCI) has advised that a balanced approach to the expatriate employment levy should be adopted since it has the potential to affect the inflow of Foreign Direct Investments (FDI).
In a statement signed by Chinyere Almona, Director General at LCCI, the body said, “The policy aims to address wage gaps between expatriates and the Nigerian Labour force while encouraging skills transfer and the employment of qualified Nigerians in foreign-owned companies.
Commenting on the issue in an interview, the President and Chairman of LCCI, Gabriel Idahosa expressed concern that the EEL contradicts the international trade agreements and the obligations contained therein.
He said, ” For instance, Nigeria is a signatory to the African Continental Free Trade Area [AfCFTA] agreement. One of the pillars of the AfCFTA is the free movement of skilled labour across the continent, which is complemented by non-discriminatory measures against fellow Africans.
“Quite importantly, this could trigger retaliatory measures against Nigerians working across Africa and other nations of the world; frustrate regional integration efforts, and portray Nigeria as a spoiler among her peers.
“The policy will surely undermine the administration’s determination to position Nigeria as an attractive global investment destination and may engender a cold welcome towards the President’s future foreign investment promotions endeavours, as well as undermine our efforts at becoming a hub for shared services centre and business process outsourcing,” he added.
LCCI, said it supports government policies that enhance the profile of the business environment, generate more revenue for the government, and create more opportunities for local employment, however, expresses its concern about the likely perception by foreign investors that the Nigerian government is not accommodative to foreign workers.
Part of the statement reads, “Capital importation into Nigeria in the fourth quarter of 2023 stood at 1.088 billion out of which only 16.90 per cent (or $184 million) came in as Foreign Direct Investments.
The chamber had expected that issues like a levy on foreign workers with tax implications would have been brought before the Presidential Committee on Fiscal Policy and Tax Reforms for inputs that align with their mandate of improving the business environment.