767 manufacturing firms shut down in 2023 – MAN
The Manufacturers Association of Nigeria (MAN) has said that 767 manufacturing companies shut down in 2023 while 335 others became distressed due to multidimensional challenges besetting the sector, warning that the implementation of the newly introduced Expatriate Employment Levy (EEL) will aggravate the already distressing situation.
EEL is a mandatory annual levy of between $10,000 and $15,000 imposed by the Federal Government on employers hiring expatriate workers, effective from 15th March, 2024.
Director General of MAN, Segun Ajayi-Kadir, in a statement made available to Vanguard on Tuesday.
His words: “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, especially to manufacturers.
“The manufacturing sector is already beset with multidimensional challenges.
“In 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.”
He added: “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 further noted that the EEL contradicts our international trade agreements and the obligations contained therein.
“For instance, Nigeria is a signatory to the African Continental Free Trade Area (AfCFTA) agreement. One of the pillars of the AfCFTA is the free movement of skilled labour across the continent, which is complemented by non-discriminatory measures against fellow Africans. “Quite importantly, this could trigger retaliatory measures against Nigerians working across Africa and other nations of the world; frustrate regional integration efforts and portray Nigeria as a spoiler among her peers.
“MAN posits that the rather punitive 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,” he stated.
