The Manufacturers Association of Nigeria (MAN) has reported that 767 manufacturers had to shut down their operations while 335 became financially distressed in 2023.
The Association in a statement attributed this to exchange rate volatility, rising inflation and other economic challenges that have worsened the investment climate.
MAN further condemned the recently introduced Expatriate Employment Levy by the Federal Government, which it said runs counter to President Bola Tinubu’s Renewed Hope Agenda and the essence of his Fiscal Policy and Tax Reform initiative.
MAN is worried at the enormous negative consequences of the levy on the manufacturing sector which it argues cannot be accommodated at this time of evident downturn in Nigeria’s economy.
The statement read in part, “The imposition of EEL poses a 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.
“The manufacturing sector is already beset with multidimensional challenges. In the year 2023, 335 manufacturing companies became distressed and 767 shut down.”
The statement further noted that capacity utilisation in the sector has declined to 56 per cent amid rising interest rates and scarcity of forex needed to import raw materials and machinery.
It added, “Inventory of unsold finished products has increased to N350bn and the real growth has dropped to 2.4 per cent.”
MAN warns that the EEL contradicts the country’s international trade agreements and the obligations contained therein.
It argued that Nigeria is a signatory to the African Continental Free Trade Area agreement, which seeks to promote the free movement of skilled labour across the continent, which is complemented by non-non-discriminatory measures against fellow Africans.
The association expressed worry that the introduction of the levy could trigger retaliatory measures against Nigerians working across Africa and other nations of the world and may also frustrate regional integration efforts and portray Nigeria as a spoiler among her peers.
“This levy, if not reversed, might expose the Federal Government to a plethora of lawsuits that would distract Government from the task of salvaging the current dire situation of our economy.”
In its recomrecommendations, the Body urged the president to direct that the implementation of the Expatriate Employment Levy be discontinued.
The Expatriate Employment Levy, a new policy introduced by the Federal Government aims to address wage gaps between expatriates and the Nigerian Labor force while encouraging skills transfer and the employment of qualified Nigerians in foreign-owned companies.
The new levy is $10,000 for staff and $15,000 for directors. This represents a significant shift from the $2,000 paid by foreign nationals for the Combined Expatriate Residence Permit and Alien Card.
According to NBS, Nigerian nationals constitute only 59 per cent of total jobs in Nigeria, their wages account for less than 45 per cent of total wages, and the average basic salary of expatriates stands at more than 45 per cent above the basic salary
(C) ControlTV 2024.
