Expatriate Employment Levy: CPPE tasks FG on review to avoid unintended consequences

The Centre for the Promotion of Private Enterprises (CPPE) has urged government to review the Expatriate Employment Levy (EEL) policy and undertake broader consultation to fine-tune it to protect genuine investors.

The Founder, CPPE, Dr Muda Yusuf, gave the advice on Sunday in Lagos, in reaction to the EEL policy.

The government had announced a mandatory annual levy for organisations employing expatriate workers.

The development requires them to pay $15,000 (£12,000) for a director and $10,000 for other employees.

According to the Federal Government, the move is to encourage foreign companies to employ more Nigerian workers.

Yusuf noted that the EEL had the dual purpose of promoting the localisation of skills and economic growth.

He, however, stressed the importance of worrying about the implications of possible diplomatic reciprocity, especially for the Nigerian diaspora community.

He stated that while the broad objectives of the policy were laudable, serious concerns remained about its unintended consequences.

Yusuf noted that there were extant legislations and regulations with similar objectives such as the expatriate quota, National Content Act, and Presidential Executive Orders 3 and 5.

“The expatriate quota empowers the Nigeria Immigration Service to give approvals to companies for expatriate staff engagement only when there is no local capacity. Companies currently pay $2000 per expatriate annually.

“There is the National Content Act for the oil industry which offers tremendous opportunities for indigenous investors to offer services to oil and gas companies.

“Indigenous capacity in the sector had grown remarkably since the enactment of the act.

“The Presidential Executive Orders directed Ministries, Departments and Agencies to give first right of refusal to indigenous contractors, service providers for procurement purposes.

“The point to stress is that implementation of these legislations and regulations has been very weak thus affecting the outcomes. The problem is not lack of policies, but the institutional structure to deliver results,” he said.

The CPPE founder said the timeline for compliance with the new policy was too short, noting that the policy gave barely four weeks for companies to comply.

According to him, for such a major policy shift, companies needed to be given minimum of six months, seeing that the new policy would be very disruptive for their businesses, plans and projections.

“Some of the companies affected are major investors that have investment billions of dollars and have been in Nigeria for decades. This administration, being an investment friendly regime, should give companies more time.

“The country needs more direct investors than portfolio investors at this time. But ironically, both foreign direct investors and domestic direct investors would be more negatively impacted than portfolio investors.

“There are serious implications for diaspora Nigerians as the policy may trigger reciprocal actions from other countries and this may affect Nigerians in diaspora.

“There are currently over 17 million Nigerians in various countries around the world doing extremely well in various fields and this is a pool of very valuable external sector assets for us as country.

“We have the largest diaspora population in Africa and we also have the highest diaspora remittances on the continent, generally in excess of $20 billion. All of these could be at risk as a result of this policy.

“If the reciprocity policy is activated in any of their host countries, the effect on our diaspora citizens will be very devastating,” he said.