In a report released by the Manufacturers Association of Nigeria (MAN), 335 manufacturing enterprises have become distressed and 767 have closed in 2023. This comes at a time of ongoing debate around the newly introduced Expatriate Employment Levy (EEL) of $10,000 and $15,000 for personnel and directors, respectively.
In a warning issued by MAN, the association has stated that the new EEL would have a detrimental effect on the confidence of both international and domestic investors in President Bola Ahmed Tinubu’s government. MAN has expressed concern that the new tax would have a negative impact on the Nigerian manufacturing sector.
The opinions were expressed in a statement released yesterday by Mr. Segun Ajayi-Kadir, Director-General of MAN, titled “MAN Expresses Grave Concerns over the Expatriate Employment Levy.”
It described the latest levy as “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 needed foreign nationals”.
The statement said EEL “is potentially an albatross to the realisation 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”.
Ajayi-Kadir added, “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.
“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 efforts at becoming a hub for shared services centre and business process outsourcing.”
According to the statement, “The manufacturing sector is already beset with multidimensional challenges. In year 2023, 335 manufacturing companies became distressed and 767 shut down.
“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.”