Like NECA, LCCI cautions FG on Expatriate employment levy, says it will impact FDI

Like the Nigeria Employers’ Consultative Association (NECA), the Lagos Chamber of Commerce and Industry (LCCI) has advised that a balanced approach to expatriate employment levy should be adopted because it has a potential impact on inflows of foreign direct investments.

LCCI Director-General Chinyere Almona on Tuesday in Lagos disclosed that the advice was to ensure the levy does not become an inhibitor to attracting and retaining foreign investments, which are crucial for economic growth.

On February 27, the federal government announced a mandatory annual levy for organisations employing expatriate workers. According to the government, the move is to encourage foreign companies to employ more Nigerian workers.

The development required them to pay $15,000 for a director and $10,000 for other employees.

NECA had earlier kicked against the levy saying it will affect FDI drive.

Similarly, Ms Almona noted that though the policy was aimed to address wage gaps between expatriates and the Nigerian labour force while encouraging skill transfer and employment of qualified Nigerians in foreign-owned companies, she stated the need for a balanced approach to expatriate employment and its potential impact on FDI inflows, stressing that while the LCCI fully supported government policies that enhanced the profile of the business environment and generated more revenue for the government, there were concerns about foreign investors’ likely perception of it.

READ ALSO:NECA rejects expatriate employment levy, says it’ll discourage investment

Ms Almona said the perception that the Nigerian government was not accommodating to foreign workers was harmful to the country’s drive for FDI inflows.

She said the EEL might trigger the relocation of foreign companies to neighbouring countries that presented a more conducive and less expensive environment for business.

The LCCI boss added that the policy might likely spark retaliatory actions by other countries by imposing levies on foreigners, particularly targeting Nigerian workers, affecting diaspora remittances.

“With the drive for FDIs into Nigeria, we need a conducive business environment to attract these kinds of investments into the country. Capital importation into Nigeria in the fourth quarter of 2023 stood at $1.088 billion, out of which only 16.90 per cent (or $184 million) came in as FDI.

“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 manufacturers in these fields to encourage them to come in and boost supply of such scarce products,” she said.

Ms Almona added that imposition of the levy meant that expatriates would be subjected to two administrative procedures to procure the Combined Expatriate Residence Permit and Alien Card (CERPAC) permit.

She also mentioned that having two procedures meant more human interfaces, bureaucracy, and application costs.

“We recommend that the government should continue to work with already established and functional 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,” she said.

By: Babajide Okeowo

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