767 Manufacturing Firms Shut Down Due to New Levy in Nigeria


In 2023, Nigeria saw 767 manufacturing firms shut down, with another 335 in distress, according to the Manufacturers Association of Nigeria (MAN). These closures and distresses are due to the many challenges the sector faces, like high interest rates, foreign exchange issues, and unsold products worth N350 billion.

The newly introduced Expatriate Employment Levy (EEL), set to start on March 15, 2024, has raised more worries among manufacturers. The EEL requires employers hiring expatriates to pay a yearly levy of $10,000 to $15,000. MAN warns that this levy could significantly raise business costs, especially for manufacturers already facing many challenges.

MAN’s Director-General, Segun Ajayi-Kadir, highlights the potential effects of the EEL on manufacturing and the Nigerian economy. He says the sector’s capacity use is down to 56%, and interest rates are above 30%. Real growth has also dropped to 2.4%, showing a tough economic situation for businesses.

Ajayi-Kadir argues that while the EEL aims to boost local jobs and forex income, it could discourage foreign investment and hinder knowledge transfer, crucial for Nigeria’s growth.

The EEL also raises concerns about Nigeria’s international trade deals, like the African Continental Free Trade Area (AfCFTA). This levy goes against AfCFTA’s free movement of skilled workers across Africa and could lead to other African countries imposing similar measures on Nigerians.

MAN believes the EEL is seen as punishment for investing in Nigeria and hiring foreign workers. This view could deter multinational companies from investing in Nigeria or having regional offices there, making Nigeria a more costly place for global expertise.

MAN calls for a review of the EEL and other economic policies to make Nigeria a better place for business. This review is crucial to create more jobs, attract foreign investment, and grow the economy.

“Government Suspends Expatriate Employment Levy for Broader Consultations”

In a significant turn of events, the federal government has suspended the implementation of the Expatriate Employment Levy (EEL) to allow for broader consultations. The decision to suspend the levy, which was recently enacted by the Federal Ministry of Interior and launched by President Bola Tinubu, follows strong opposition from private sector stakeholders. The suspension, announced in collaboration with key stakeholders including the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), aims to facilitate further consultations and review of the EEL policy by a joint committee comprising relevant ministries and stakeholders. This move underscores the government’s commitment to creating a conducive environment for both local and international investors, aligning with Nigeria’s economic growth objectives.

The NACCIMA president expressed gratitude for the government’s willingness to engage in dialogue and emphasized the importance of creating an inviting atmosphere for investors. The suspension of the Expatriate Employment Levy reflects the government’s responsiveness to stakeholder concerns and its dedication to fostering a favorable investment landscape in Nigeria.


Leave a Reply