As the policy reforms-induced current macroeconomic whirlwinds in Nigeria’s business landscape continue unabated, the Manufacturers Association of Nigeria (MAN) has opposed the planned implementation of the Expatriates Employment Levy (EEL) by the Federal Government, saying implementing the fiscal measure could aggravate the crisis in the real sector.
The association in a statement signed on Tuesday by its Director-General, Segun Ajayi-Kadir, indicated that in 2023 767 manufacturing companies closed their operations even as the sector’s capacity utilization in the sector declining to all time low of 56%.
According to the association, with interest rate currently above 30%, imposing a foreign exchange import raw levy will be an additional burden to the sector’s operators, which they cannot bear now.
The Director-General stated: “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%; and foreign exchange to import raw materials 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
“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”, Ajayi-Kadir stressed.
He further stated 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 that is already beset with multidimensional challenges.
The MAN boss maintained that the position of the association on the levy is that it is already being perceived as a punishment imposed on investors for daring to invest in Nigeria and indigenous companies for employing needed foreign nationals capable of deterring multinational companies from either investing in Nigeria or setting up regional headquarters in the country.
This is even as he stated that manufacturers strongly believed that the levy will make Nigeria a more expensive location for global expertise that international companies require for their operations.
Ajayi-Kadir expressed concerns that the levy contradicted the country’s international trade agreements, and the obligations contained therein, pointing out 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 manufacturers group, therefore, urged President Bola Tinubu to suspend the implementation of the EEL in the overall interest of the nation’s economy, and to re-assure both local and foreign investors of his administration’s commitment to creating an investment-friendly environment and ease of doing business to grow the economy.
