The Manufacturers Association of Nigeria (MAN) has warned that the planned implementation of the Expatriates Employment Levy (EEL), by the federal government, may for many businesses toe the path of the 767 companies that shut down in the country, in2023.

 

 

The association in a statement signed by its Director General, Segun Ajayi-Kadir,  stated that with capacity utilization  in the sector  declining to 56%; interest rate effectively over 30%; and production machine inventory of unsold finished products, increasing to  N350 billion; the sector does not have the capacity to bear such additional burden at this time.

 

 

MAN insisted that since expatriates in Nigeria currently pay  more than $2000 for CERPAC, the sector cannot afford another disincentive to increased investment and portfolio expansion.

 

 

Describing the levy as  capable of hampering the inflow of foreign direct investments (FDIs), and dis-incentivise local investors, the association noted that other  unintended negative consequences of the levy on the manufacturing sector are huge,  and cannot be accommodated at this time of evident economic downturn in  the country.

 

 

“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,” the association stated.

 

It stated further that the imposition of EEL would be another burden to the cost of doing business in Nigeria, especially to manufacturers, already operating in a sector, already beset with multi-dimensional 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.

 

 

“MAN posits that the 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. It will deter multinational companies from either investing in Nigeria or setting up regional headquarters in the country. Also, the levy will make Nigeria a more expensive location for global expertise that international companies require for their operations,” the association argued.

 

 

 

It also expressed concerns that the levy  contradicts the nation’s international trade agreements, and the obligations contained therein, adding that with Nigeria being a signatory to the African Continental Free Trade Area [AfCFTA] agreement, one of the pillars of the AfCFTA remains the free movement of skilled labour across the continent,  complemented by non-discriminatory measures against fellow Africans.

 

 

The association, therefore, called on President Bola Tinubu to direct the discontinuation of the implementation of the policy, in the overall interest of the national economy,  and re-assure  domestic and foreign investors of the country’s commitment to an investment -friendly environment and ease of doing business.