MAN moans 767 manufacturing plants closed down in harsh business climate
By Jeph Ajobaju, Chief Copy Editor
Up to 767 manufacturing plants shut down and 335 became distressed in 2023, according the Manufacturers Association of Nigeria (MAN), which cited among the reasons exchange rate volatility, rising inflation, and other challenges buffeting the investment climate.
MAN gave the figures in a statement which also condemned the new Expatriate Employment Levy (EEL) introduced by Abuja.
It said the levy contradicts the Hope Agenda of President Bola Tinubu and the crux of his Fiscal Policy and Tax Reform – with huge consequences on the manufacturing sector in an economy that is already down.
“The imposition of EEL poses a potential impact on the manufacturing sector and the economy at large,” the statement said.
“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 the year 2023, 335 manufacturing companies became distressed and 767 shut down.”
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Manufacturing capacity utilisation dips to 56%
MAN disclosed capacity utilisation in the sector has declined to 56 per cent amid rising interest rates and scarcity of foreign exchange (forex) to import raw materials and machinery.
“Inventory of unsold finished products has increased to N350bn and the real growth has dropped to 2.4 per cent.”
It reiterated Nigeria is a signatory to the African Continental Free Trade Area (AfCFTA) agreement, which seeks to promote the free movement of skilled labour across the continent, complemented by non-discriminatory measures against fellow Africans.
It expressed concerned the EEL could trigger retaliatory measures against Nigerians working across Africa and other nations and may also frustrate regional integration and portray Nigeria as a spoiler among its peers.
“We are equally worried that the imposition of such a levy could have far-reaching implications for our national economy and potentially exert pressure on our national currency could be introduced through a Handbook, rather than a law enacted by the National Assembly.
“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.”
MAN urged Tinubu to order the discontinuation of the implementation of the EEL introduced to address wage gaps between expatriates and the local labour 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, a significant rise from $2,000 paid by foreign nationals for the Combined Expatriate Residence Permit and Alien Card.
National Bureau of Statistics (NBS) data shows Nigerians have 59 per cent of local jobs but their wages account for less than 45 per cent of total wages, as the average basic salary of expatriates is more than 45 per cent greater than Nigerians’.
However, the EEL has been strongly criticised by the Organised Private Sector (OPS), which insists it may negatively affect Foreign Direct Investment (FDI) among other consequences, as expressed below:
Chinyere Almona (Lagos Chamber of Commerce and Industry Director General)
“The Expatriate Employment Levy may cause unintended consequences that may trigger the relocation of foreign companies to neighbouring countries that present a more conducive and less expensive environment for business,” Almona stressed in a statement.
“The imposition of this levy may likely spark retaliatory actions taken by other countries by imposing levies on foreigners and particularly targeting Nigerian workers.
“This will in turn affect diaspora remittances from Nigerian workers resident in other countries.”
Muda Yusuf (Centre for the Promotion of Private Enterprise Chief Executive Officer)
“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,” Yusuf warned in a statement.