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Sunday, March 3, 2024

Expatriate employment levy dangerous to foreign direct investments in Nigeria – CPPE tells Tinubu

The Centre for the Promotion of Private Enterprise says the federal government’s expatriate employment levy will hurt foreign Direct Investments into Nigeria.

Muda Yusuf, Director at CPPE, disclosed this in a statement on Sunday, reacting to the recently launched policy by President Bola Ahmed Tinubu.

Recall that President Bola Ahmed Tinubu launched the EEL handbook on Tuesday last week, which will see a levy of between $10,000 to $15,000 on employers that employ expatriates in Nigeria.

However, CPPE said the move would undermine the country’s Foreign Direct Investment drive, noting that the country already has enough extant laws with similar objectives.

The economic think-tank group also condemned the timing of the scheme.

It appealed to Tinubu to review the policy to avoid hurting genuine investors.

“The CPPE notes the recent introduction by the government of the Expatriate Employment Levy (EEL) to promote the localization of skills and economic growth. The broad objectives of the scheme are laudable. However, the CPPE has serious concerns about the policy’s unintended consequences.

“The timeline for compliance is too short. The policy gave barely four weeks for companies to comply. For such a major policy shift, companies must be given at least 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. This administration, being an investment-friendly regime, should give companies more time.

“The country needs more direct investors than portfolio investors at this time. But ironically, both foreign direct investors 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, and Healthcare – all of which require varying skills and competencies. The truth is that major FDIs will typically hire some critical staff to oversee their investments. Considering this class of investors, given the scale of their investments, which could be in billions of dollars, is imperative.

“The challenge of influx of foreigners, especially the unskilled ones, is more pronounced in some sectors than others. Vulnerable sectors include construction, distributive trade, hospitality and logistics. The policy should be targeted at these more vulnerable sectors.

“There are serious implications for diaspora Nigerians. The policy may trigger reciprocal actions from other countries, and this may affect Nigerians in the diaspora. There are currently over 17 million Nigerians in various countries around the world doing extremely well in the fields of Education, Medicine, Health, Sports, Media & Entertainment, Leadership & Politics, Finance, Science & ICT, Transportation, Tourism, Industry and Agribusiness. This is a pool of very valuable external sector assets for us as a country. We have the largest diaspora population in Africa. We also have the highest diaspora remittances on the continent, generally over $20 billion. All of these could be at risk as a result of this policy.

“The CPPE appeals to the government to review the policy and undertake broader consultation to fine-tune it to ensure that we do not hurt genuine investors in the country. It is also important to worry about the implications of possible diplomatic reciprocity, especially for our diaspora community”, he stated.

DAILY POST recalls that Foreign capital investments in Nigeria increased by 66.27 per cent ↗ to $1,060.73 million in the fourth quarter of 2023 compared to the preceding quarter.

Michael Maren
Michael Maren
Former marine biologist who likes to spend as much time in the tropics as possible, due to a horrible time I once had in Alaska. Brrrr.

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