LCCI PERSPECTIVES ON NIGERIA’S EXPATRIATE EMPLOYMENT LEVY

Lagos Chamber of Commerce and Industry (LCCI) acknowledges the recent introduction of the Expatriate Employment Levy (EEL) by the Federal Government. The policy aims to address wage gaps between expatriates and the Nigerian Labor force while encouraging skills transfer and the employment of qualified Nigerians in foreign-owned companies. LCCI recognizes the need for a balanced approach to expatriate employment and its potential impact on Foreign Direct Investment (FDI) inflows. According to NBS, Nigerian nationals constitute only 59% of total jobs in Nigeria, their wages account for less than 45% of total wages, and the average basic salary of expatriates stands at more than 45% above the basic salary.

While we are fully in support of government policies that enhance the profile of the business environment, generate more revenue for the government, and create more opportunities for local employment, we are concerned about likely perception by foreign investors that the Nigerian government is not accommodative to foreign workers. This perception is harmful to our drive for Foreign Direct Investments (FDIs) inflows.

CONCERNS AND RECOMMENDATIONS

  1. With the drive for Foreign Direct Investments (FDIs) into Nigeria, we need a conducive business environment to attract these kinds of investment into the country. Capital importation into Nigeria in the fourth quarter of 2023 stood at US$1.088billion out of which only 16.90 percent (or US$184 million) came in as Foreign Direct Investments. We call on the government to consider exempting sectors that require unique skill sets for projects carried out in the country especially in construction, and other sectors where we have critical shortage of supply of goods to meet rising demand. In sectors where the country lacks capacity to boost supply of critical products like food, cement, drugs, and other agricultural inputs, we urge the government to charge concessionary or totally exempt the manufacturers in these fields to encourage them to come in and boost supply of such scarce products.
  • The imposition of this levy means that expatriates will be subjected to two administrative procedures to procure the Combined Expatriate Residence Permit and Allien Card (CERPAC) permit and now the EEL. From experience, having two procedures will mean more human interfaces, more bureaucracy and more application costs. We recommend that the government continue to work with the already established and functional Combined Expatriate Residence Permit and Allien Card (CERPAC) with provision for yearly or regular reviews in rates according to internationally accepted rates. This way, we present our economy as open for business.
  • The Expatriate Employment Levy (EEL) 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.
  • 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.
  • The Chamber had expected that issues like a levy on foreign workers with tax implications would have been brought before the Presidential Committee on Fiscal Policy and Tax Reforms for inputs that aligns with their mandate of improving the business environment. There is also a need to align the provisions of this levy with existing frameworks like the Nigerian Content Development and Monitoring Board (NCDMB), existing incentives granted to pharmaceutical companies by the National Agency for Food and Drug Administration (NAFDAC) and the Nigerian Civil Aviation Authority (NCAA).
  • The point must be made that maintaining expatriates in Nigeria is expensive and as such our members only bring in expatriates for very critical roles that require highly technical skills that are not readily available locally. It is out of necessity that our members bring in expatriates and as such any imposition that makes this provision expensive will discourage them and jeopardize projects requiring such expatriates.
  • In comparison with developed economies, we note that countries like the United Kingdom and United States of America collect charges on expatriates in the form of visa fees at the point of processing entrance for the foreign workers coming into their countries. Countries like Singapore and Malaysia charge foreigner worker levy with several exemptions according to industries, duration, skills etc. There is a need for this policy to be reconsidered in terms of the proposed rate, implementation timeline, and possible combination with the CERPAC permit.

The LCCI acknowledges the government’s efforts to boost local employment and skills development through the EEL. However, a careful balance must be struck so that this levy does not become an inhibition to attracting and retaining foreign investments crucial for economic growth.

DR CHINYERE ALMONA, FCA

DIRECTOR GENERAL

LAGOS CHAMBER OF COMMERCE & INDUSTRY

Monday 4th March 2024

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