Reprieve at Last for Manufacturers

Stakeholders in the manufacturing and organised private sector welcomed the suspension of the controversial Expatriate Employment Levy by the federal government as a sign that President Bola Ahmed Tinubu’s administration is a listening government, writes Dike Onwuamaeze

Manufacturers and other members of organised businesses in Nigeria heaved a sigh of relief on Friday, March 8. On that day reprieve came their way as the federal government gave heed to their agitations and suspended the rolling out of the controversial Expatriate Employment Levy (EEL), which imposed $15,000 and $10,000 on companies employing expatriates as directors and staff respectively.

The suspension was communicated to the business community by the Minister of Industry, Trade and Investment, Mrs. Doris Uzoka-Anite, who was accompanied by the Minister of Interior, Hon. Olubunmi Tunji-Ojo.   

Uzoka-Anite said: “We came with NACCIMA and the organised private sector to meet with the Minister of Interior to get clarity on the EEL and we have had very engaging and fruitful discussion and agreed to set up a joint committee to look at the implications of the EEL and how to implement it; pending that, the EEL implementation and rollout will be on hold until the stakeholders convene and meet.”

On his part, Olubunmi Tunji-Ojo said: “This is about stakeholders’ engagement. It’s the first line in terms of the engagement process and we assure you the engagement process will continue and at the end of the day, there will only be one winner, and that will be Nigeria.”

Following the communication of the suspension of the roll out of the EEL, the President of NACCIMA, Mr. Dele Oye, and Chairman, Petroleum Technology Association of Nigeria (PETAN), Mr. Nicolas Odinuwe, who were both present at the stakeholders meeting, hailed the outcome of the meeting, describing it a significant breakthrough.

NACCIMA Applauds FG

Oye, said that he was entirely grateful for the government’s current stance on the policy, which had received knocks from key industry players and other stakeholders.

He said: “Our members were impacted by the proposed policy. So we want to use the opportunity to appeal to the industrialists and our various members that they should go on doing their business and that the effect or the likelihood of the proposed policy will be reviewed after we have done the stakeholders engagement.”

Similarly, Odinuwe said: “It’s been a very fruitful meeting and I am happy with the outcome and see that collaboration now exists between the two the ministers that were involved in it.

“And I would hope that the joint committee being set up will work, quickly to make sure that, all nerves are calm so that the industry can grow.”

NECA, CPPE Hail EEL Suspension

Also reacting to the postponement of the implementation of the EEL, the Nigeria Employers’ Consultative Association (NECA) and the Centre for the Promotion of Private Enterprise (CPPE) commended the federal government for putting on hold the implementation of the Expatriate Employment Levy (EEL).  

The Director General of NECA, Mr. Adewale-Smatt Oyerinde, said: “We commend the federal government through the Minister of Interior and the Minister of Industry, Trade and Investment for their roles in putting the EEL on hold.

“While we appreciate the objectives of the scheme and the need to address gaps in the management of expatriate employment in Nigeria, the decision by the government is nothing short of genuine concern for the plight of organised businesses.

“This has further affirmed President Bola Ahmed Tinubu’s administration as a listening one. The speed of response to organised businesses’ concern was commendable and worthy of note.”

Speaking in the same vein yesterday, the Chief Executive Officer of CPPE, Mr. Muda Yusuf, said that the suspension of the EEL “is a demonstration of the fact the Tinubu’s administration is responsive, democratic and inclusive in its governance process.

“It shows that the administration is a listening government. Responsiveness to the concerns of stakeholders is a critical attribute of true democracy.”

Yusuf, however, stressed that there are already extant laws and regulations within the framework of the Nigeria Immigration Act and the Expatriate Quota Handbook that squarely addressed the outcomes contemplated in the EEL.  

He said: “What needs to be done differently is to strengthen the institutional and regulatory effectiveness in the Ministry of Interior and the Immigration Service to ensure compliance and enforcement. 

“The truth is that relevant institutions have over the years been considerably compromised. These are the gaps that need to be addressed.

“We really do not need a new policy, regulation or handbook on the employment of expatriates. A new regulation or policy will be superfluous. The current regulations or handbook could be tweaked, if necessary.” 

He pointed out that evidence of regulatory weaknesses is visible from the numerous instances of expatriates operating in the retail sector in the open markets, competing with Nigerian market women and men.  

“We surely do not lack expertise in retail trading. But we have seen cases of some expatriates taking up shops in our traditional markets.  Many of our indigenous traders in the markets have been displaced by these expatriates because they cannot compete with them.

“There are similar concerns expressed by our indigenous retailers in the computer and electronics, textiles and fabrics, and fashion accessories where expatriates are competing with them at the retail end of the market. 

“Some of these (expatriate owned) companies dominate the entire value chain as manufacturers, distributors and retailers.

“These are some of the issues that need to be addressed by the immigration service and the ministry of interior.  Competition with our struggling market women and men is clearly an unfair competition,” Yusuf said. 

Private Sector Outcry 

Prior to the announcement of the suspension of the levy, the Nigerian organised private sector has raised an outcry against the new levies, describing it as disincentive to foreign and domestic investors and fostering the perception that Nigeria can carry on without productive inputs of foreigners in its economy.

They lampooned the proposed EEL as “exploitative, extortionist and a contradiction that cannot be explained” at a period the country is campaigning strenuously for Foreign Direct Investments (FDIs).

The Director General of MAN, Mr. Segun Ajayi-Kadir, stated that the association is deeply concerned over the EEL. Ajayi-Kadir said that “the association is struck with disbelief, seeing that the levy … is potentially an albatross to the realisation of President Bola Ahmed Tinubu’s aspirations for private sector led economy and would certainly ruin the trust and confidence he is striving hard to build among domestic and foreign private investors.”

He added: “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, the manufacturers believed that while the levy is ostensibly primed to promote local employment, improve forex and non-oil income earnings, it would regrettably deter foreign direct investments, disencourage domestic investors who have partnership with foreign investors and undermine knowledge transfers that are critical for Nigeria’s economic growth.

According to Ajayi-Kadir, “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 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 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 have dropped to 2.4 per cent.

“Expatriates in Nigeria currently pay more than $2000 for Combined Expatriate Residence Permit and Allien Card (CERPAC). The sector cannot afford another disincentive on investment and portfolio expansion.”

LCCI, CPPE Agitation

The Lagos Chamber of Commerce and Industry (LCCI) and the Centre for the Promotion of Private Enterprise (CPPE) also added their voices in clamouring against the EEL.

Expressing the chamber’s perspectives on the EEL, the Director General of LCCI, Dr. Chinyere Almona, called for a balanced approach to expatriate employment and its potential impact on FDI inflows.

Almona said that chamber is “concerned about likely perception by foreign investors that the Nigerian government is not accommodative to foreign workers. This perception is harmful to our drive for FDIs inflows.”

The LCCI highlighted that capital importation into Nigeria in the fourth quarter of 2023 was $1.088 billion but only 16.90 per cent of this sum, which is $184 million, came in as FDIs. 

“We call on the government to consider exempting sectors that require unique skill sets for projects carried out in the country especially in construction, and other sectors where we have critical shortage of supply of goods to meet rising demand.

“In sectors where the country lacks capacity to boost supply of critical products like food, cement, drugs, and other agricultural inputs, we urge the government to charge concessionary or totally exempt the manufacturers in these fields to encourage them to come in and boost supply of such scarce products.”

The implication of the EEL meant that expatriates would be subjected to two administrative procedures. These are the procurement of the Combined Expatriate Residence Permit and Alien Card (CERPAC) permit and the EEL. Having these two procedures would mean more human interfaces, more bureaucracy and more application costs.

“We recommend that the government continue to work with the already established and functional CERPAC with provision for yearly or regular reviews in rates according to internationally accepted rates. This way, we present our economy as open for business,” the LCCI said.