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CPPE: Nigeria’s expatriate levy will hinder FDI drive
Muda Yusuf, Director at the Centre for the Promotion of Private Enterprises believes the recent hike in Nigeria’s Expatriate Employment Levy will hinder investment drive into the country, particularly, Foreign and domestic Direct Investors. He stresses the need for the Nigerian government to give some consideration to this class of investors. He joins CNBC Africa for this discussion.
Mon, 04 Mar 2024 11:56:08 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Significant hike in Expatriate Employment Levy raises concerns about investment attractiveness in Nigeria
- Abrupt timeline for compliance with new levy poses challenges for affected expatriates and investors
- Implications of levy on African Continental Free Trade Agreement and potential need for policy reviews
The recent increase in Nigeria’s Expatriate Employment Levy has sparked concerns over the country's investment drive, particularly among foreign and domestic direct investors. Muda Yusuf, Director at the Centre for the Promotion of Private Enterprises, expressed his apprehension about the implications of the new policy on investment across key sectors during an interview with CNBC Africa. Yusuf highlighted the need for the Nigerian government to consider the impact on investors and urged for a review of the levy.
The objectives of the Expatriate Employment Levy, as stated by the government, aim to enhance the development of local skills, foster job creation, and facilitate technology transfer. However, Yusuf emphasized that while these goals are commendable, the significant jump in the levy fees could deter potential investors. Under the new regulation, the levy for expatriate employees will increase from $2,000 to $10,000, and for directors, it will rise to $15,000. This substantial rise, amounting to over 20 million Naira in local currency, raises concerns about the affordability and attractiveness of investing in Nigeria.
One of the key points raised by Yusuf is the abrupt timeline for compliance with the new policy. The short notice given to affected expatriates and investors, requiring them to adhere to the levy within four weeks, has been deemed unrealistic and could create uncertainty in the investment landscape. Moreover, Yusuf highlighted the potential risk of reciprocity from other countries in response to Nigeria's levy, considering the large Nigerian diaspora globally. Any retaliatory measures by foreign nations could impact Nigerian expatriates and jeopardize remittance inflows, a significant external sector asset for the country.
Another critical aspect emphasized by Yusuf is the implications of the levy on the African Continental Free Trade Agreement (AfCFTA). At a time when efforts are being made to promote economic integration and trade within Africa, the imposition of such levies on African expatriates working in Nigeria could contradict the principles of the AfCFTA. Yusuf stressed the need for a review of the policy to align with the broader objectives of economic cooperation on the continent.
In terms of potential reviews and considerations for the levy, Yusuf recommended a more strategic approach by harmonizing existing legislations and regulations with similar goals. He suggested that the government should prioritize targeted sectors that are vulnerable to abuse and exempt investors who have made substantial contributions to the economy. Additionally, Yusuf urged for a more nuanced evaluation of the fee structure, highlighting that the significant hike from $2,000 to $10,000 or $15,000 may be prohibitive for investors.
Addressing the influx of unskilled foreigners across various sectors, Yusuf proposed a targeted policy approach based on sector-specific requirements. By enhancing the effectiveness of the expatriate quota policy and implementing stricter screening processes, Nigeria could better regulate the entry of expatriates based on genuine skills and expertise needed for specific industries.
In conclusion, the concerns raised by Yusuf underscore the potential challenges that the increased Expatriate Employment Levy may pose to Nigeria's investment climate and its relations with the global community. As stakeholders engage in discussions about the impact of the levy, the call for a thorough review and strategic considerations to support investment inflows remains crucial in navigating the complexities of the current economic landscape.
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