…Cries out regarding unintended consequences on the manufacturing sector.
SIAKA MOMOH
The Manufacturers Association of Nigeria(MAN), is deeply worried over FG’s recently introduced Expatriate Employment Levy (EEL) and Laments the unintended consequences that this new government levy will have on the already depressed manufacturing sector.
Arguing in a statement issued to the press on Tuesday, Segun Ajayi-Kadir, MAN’ Director General said: “The Association is struck with disbelief, seeing that the levy runs contrary to Mr. President’s Renewed Hope Agenda and the kernel of his Fiscal Policy and Tax Reform initiative. It is potentially an albatross to the realization of Mr. President’s private sector led economy aspirations and would certainly ruin the trust and confidence he is striving hard to build among domestic and foreign private investors.”
For MAN, “The unintended negative consequences on the manufacturing sector are humongous and cannot be accommodated at this time of evident downturn in our economy. As the major investors and employers in Nigeria, manufacturers believe that, while the levy is ostensibly primed to promote local employment, improve forex and non-oil income earnings, the levy will regrettably deter foreign direct investments, disincentivize domestic investors who have partnership with foreign investors and undermine knowledge transfers that are critical for Nigeria’s economic growth.”
MAN holds that the imposition of EEL poses potential impact on the manufacturing sector and the economy at large. “This will in turn mark an unwarranted and unprecedented addition to the cost of doing business in Nigeria, especially to manufacturers,” it says.
MAN’s concern the additional negative impact the levy is coming with. It explains: “The manufacturing sector is already beset with multidimensional challenges. In year 2023, 335 manufacturing companies became distressed and 767 shut down. The capacity utilization in the sector has declined to 56%; interest rate is effectively above 30%; 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%. Expatriates in Nigeria currently pay more than $2000 for CERPAC. The sector cannot afford another disincentive to increased investment and portfolio expansion.”
“This is not all. “MAN is concerned that the EEL contradicts our international trade agreements and the obligations contained therein. 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; frustrates 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 in Mr. President’s future foreign investment promotions endeavours, as well as undermine our efforts at becoming a hub for shared services center and business process outsourcing,” MAN explains.
MAN posits that the rather punitive levy is already being perceived as a punishment imposed on investors for daring to invest in Nigeria and indigenous companies for employing needed foreign nationals.MAN argues that the policy will deter multinational companies from either investing in Nigeria or setting up regional headquarters in the country and that “the levy will make Nigeria a more expensive location for global expertise that international companies require for their operations”. “Overall, we risk slowing down knowledge and skills transfer to Nigerians and undermining a key avenue for the country to move up the technology ladder”.
MAN says “We are equally worried that the imposition of such a levy that could have far reaching implications for our national economy and potentially exert pressure on our national currency could be introduced through a Handbook, rather than a law enacted by the National Assembly. This levy, if not reversed, may expose the Federal Government to a plethora of lawsuits that will distract Government from the task of salvaging the current dire situation of our economy.
“Additionally, we already have laws that were promulgated to achieve the exact purpose for which the EEL was introduced. They include the Local Content Act which guarantees the jobs of Nigerians and the Immigration Act which prescribes the primacy of consideration for Nigerians and imposes appropriate quota in the engagement of expatriate. Therefore, the EEL would amount to a duplication and a burdensome addition.”
MAN wants Mr. President to give due consideration to the above and direct that the implementation of the Expatriate Employment Levy be discontinued. It argues that t”his directive is in the overall interest of our national economy and is urgently needed to reassure the investing domestic and foreign investors of Nigeria’s commitment to an investment friendly environment and ease of doing business”.
MAN says President Tinubu should “direct the Nigeria Immigration Service to refrain from enforcing compliance with the policy”.
MAN says “while we fully support policies aimed at promoting quality job opportunities for Nigerians, we would urge Mr. President to consider the wider negative impact of the Expatriate Employment Levy.”
For the Manufacturing Association of Nigeria, “ A more effective and sustainable approach is for Government to intentionally improve on its human capital development and incentivize companies to invest in developing local talent without compromising Nigeria’s ability to attract Foreign Direct Investment (FDI).”
MAN advises that it is extremely important that Government institutionalize stakeholders’ consultations and engagement before important policies that could have far reaching implications for our economy are made. “This will allow for constructive input from the business community who are able to support Government initiatives and are the most impacted by the outcomes,” it holds..
