THE Centre for the Promotion of Private Enterprise (CPPE) has expressed worry over the Federal Government’s introduction of a new Expatriate Employment Levy (EEL) scheme, saying it would hurt ‘genuine’ investors.
The chief executive officer of CPPE, Muda Yusuf, said this in a statement on March 3.
President Bola Tinubu had on Tuesday, February 27, launched the EEL handbook, a government-mandated contribution imposed on employers who employ expatriate workers in Nigeria.
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The policy requires that such employers pay $15,000 for directors and $10,000 for other categories of expatriates annually, which translates to N22.5 million and N15 million, respectively, at the current exchange rate of N1,500 to a US dollar.
According to the policy, expatriate workers employed for at least 183 days within a year shall be liable to pay the EEL annually.
The government’s new EEL policy with the dual purpose of promoting the localisation of skills and economic growth, though laudable, raises serious concerns about the unintended consequences of the policy, the CPPE boss said.
He recalled that extant legislations and regulations existed with similar objectives.
“There is the expatriate quota, which empowers the Nigeria Immigration Service to approve companies for expatriate staff engagement only when there is no local capacity. Companies currently pay $2,000 per expatriate annually. This is equivalent to about N3 million at the current exchange rate.
“There is the National Content Act for the oil industry, which offers tremendous opportunities for indigenous investors to offer services to oil and gas companies,” he noted.
Yusuf also argued that the existence of presidential Executive Orders Three and Five mandated ministries, departments, and agencies (MDAs) to give indigenous contractors and service providers the first right of refusal for procurement purposes.
Decrying the failure of the regulations, Yusuf said, “The problem is not lack of policies, but the institutional structure to deliver results.”
Implications for investment
Yusuf said the timeline for compliance with the new policy should be longer, pointing out it gave barely four weeks for companies to comply.
He said such a significant policy shift should have given companies a minimum of six months.
“It is only fair and just to do so. This would be very disruptive for their businesses, plans and projections. Some companies affected are major investors that have invested billions of dollars and have been in Nigeria for decades.”
He believes Nigeria needs more direct investors than portfolio investors at this time.
“But ironically, foreign and domestic direct investors would be more negatively impacted than portfolio investors.
“The economy needs more investors in the real economy – oil and gas, manufacturing, infrastructure, mining, ICT, Healthcare – all of which require varying skills and competencies. The truth is that major FDIs (foreign direct investments) will typically come with some critical staff to oversee their investments,” Yusuf said.
He noted it was imperative to give some consideration to the class of investors, given the scale of their investments, which run into billions of dollars.
Yusuf said the challenge of the influx of foreigners, especially the unskilled ones, had been more pronounced in some sectors than others.
He highlighted the vulnerable sectors, including construction, distributive trade, hospitality and logistics.
He said the policy should be targeted at those vulnerable sectors and expressed fear that the policy might trigger reciprocal actions from other countries, which might affect Nigerians in the diaspora.
According to the renowned economist, over 17 million Nigerians reside in various countries worldwide, doing exceptionally well in the fields of education, medicine, health, sports, media & entertainment, leadership & politics, finance, science & ICT, transportation, tourism, industry and agribusiness.
Nigeria has the largest diaspora population in Africa and the highest diaspora remittances, generally over $20 billion.
He believes the policy could significantly hinder Africa’s continental economic integration vision.
The CPPE boss appealed to the government to review the policy and undertake broader consultation to fine-tune it to ensure Nigeria does not hurt its genuine investors.
Also, the Nigeria Employers’ Consultative Association (NECA) had raised concerns over the new policy, warning that it would discourage investment if implemented, frustrate ongoing fiscal and monetary reforms, and discourage FDI, among many other unintended negative consequences.
