*Says Expatriate Employment Levy ‘II Kill Investors Confidence
By Ken Afor
Due to the unfavorable economic environment, the Manufacturers Association of Nigeria (MAN) reported that 335 manufacturing companies faced financial difficulties, while 767 ceased operations in 2023.
The association, while reacting to the newly introduced Expatriate Employment Levy (EEL) by the administration of President Bola Ahmed Tinubu, warned that the policy could jeopardize investors confidence amid the government’s aim to foster trust and confidence among both domestic and foreign investors.
In a statement titled “MAN Expresses Grave Concerns over the Expatriate Employment Levy” by Director-General of MAN, Mr. Segun Ajayi-Kadir, he views the levy as a way of penalizing investors for choosing to invest in Nigeria and indigenous companies for hiring necessary foreign workers.
According to him, the levy has the potential to hinder the realization of the President’s aspirations for a private sector-led economy and could undermine the trust and confidence he’s working to cultivate among both domestic and foreign private investors.
He described it as a “punitive levy,” which was already being perceived as a punishment imposed on investors for daring to invest in Nigeria and on indigenous companies for employing necessary foreign nationals.
He said: “The imposition of EEL poses potential impact on the manufacturing sector and the economy at large.
“This will in turn mark an unwarranted an unprecedented addition to the cost of doing business in Nigeria, especially to manufacturers.
“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 Nigeria’s ef- forts at becoming a hub for shared services centre and business process outsourcing.”
“The manufacturing sector is already beset with multidimensional challenges.
“The capacity utilisation in the sector has declined to 56 per cent; 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 dropped to 2.4 per cent.
“Expatriates in Nigeria currently pay more than $2000 for CERPAC. The sector cannot afford another disincentive to increased investment and portfolio expansion.”
The association emphasized that the levy would discourage multinational companies from investing in Nigeria and establishing their regional headquarters within the country.
“Also, the levy will make Nigeria a more expensive location for global expertise that international companies require for their operations,” it stated.
“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 added.
The manufacturers’ association was equally worried that the imposition of such a levy, which could have far-reaching implications for the country’s economy and potentially exert pressure on Nigeria’s currency, was introduced through a handbook rather than a law enacted by the National Assembly.
It, therefore, warned that the levy could potentially lead to numerous lawsuits against the federal government, diverting attention away from addressing the urgent economic challenges facing the country.
It added: “This levy 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 duplication and burden- some addition.”
While expressing concerns that the EEL could create conflict with Nigeria’s international trade agreements and the obligations outlined within them, the association further noted that the levy could have significant repercussions, potentially leading to retaliatory actions against Nigerians working in other African nations and globally, disrupting regional integration efforts, and damaging Nigeria’s reputation as a constructive player among its peers.
It stated, “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 association, therefore, urged the president to carefully consider its arguments and instruct the discontinuation of the levy implementation, expressing firm belief that halting the policy would benefit the country’s economy and is crucial to reassure both domestic and foreign investors of Nigeria’s dedication to fostering an investment-friendly environment and facilitating ease of doing business.
“Additionally, Mr. President should direct the Nigeria Immigration Service to refrain from enforcing compliance with the policy,” MAN said.
However, Mr. Ajayi-Kadir emphasized that while MAN is fully supportive of initiatives aimed at creating quality job opportunities for Nigerians, it urges the president to take into account the broader negative impact of the EEL.
He stated: “A more effective and sustainable approach is for government to intentionally improve on its human capital development and incentivise 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 institu- tionalise 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.”
