Adedapo Adesanya
By Adedapo Adesanya
The Manufacturing Association of Nigeria (MAN) has claimed that about 767 manufacturing companies shut down operations while 335 experienced distress in 2023 following headwinds in the country.
MAN’s revelations came as it criticised and called for the stoppage of the Federal Government’s newly introduced Expatriate Employment Levy (EEL), which the association argues contradicts the objectives laid out in President Bola Tinubu’s manifesto.
According to the group, the shutdown came due to various economic difficulties, including exchange rate volatility, rising inflation, and a general worsening of the investment climate which has taken a toll on the manufacturing sector, significantly impacting its performance and sustainability.
“The manufacturing sector is already beset with multidimensional challenges. In the year 2023, 335 manufacturing companies became distressed, and 767 shut down,” it stated.
The manufacturing sector, it revealed, has seen a decline in capacity utilisation to 56 per cent, compounded by rising interest rates and a scarcity of foreign exchange needed for importing essential raw materials and machinery.
MAN added that the sector also faces an inventory of unsold finished products valued at N350 billion, alongside a real growth drop to 2.4 per cent.
“The capacity utilization in the sector has declined to 56%; interest rate is effectively above 30%; foreign exchange to import raw materials and production machine inventory of unsold finished products has increased to N350 billion and the real growth has dropped to 2.4%,” parts of the statement read.
Speaking on the new lecy introduced late last month, MAN said it could potentially increase the cost of doing business in Nigeria, particularly for manufacturers grappling with numerous challenges.
According to the manufacturers’ group, the levy which charges $10,000 for staff and $15,000 for directors, represents a drastic increase from the previous $2,000 fee for the Combined Expatriate Residence Permit and Alien Card.
“The imposition of EEL poses a potential impact on the manufacturing sector and the economy at large. This will in turn mark an unwarranted and unprecedented addition to the cost of doing business in Nigeria, especially to manufacturers,” it said.
It also said, “Expatriates in Nigeria currently pay more than $2,000 for CERPAC. The sector cannot afford another disincentive to increased investment and portfolio expansion.”
The association expressed fears that the levy could prompt retaliatory measures against Nigerians working abroad, hinder regional integration efforts, and tarnish Nigeria’s image on the global stage.
It urged President Tinubu to reconsider the implementation of the EEL, warning of its negative consequences on the manufacturing sector and the broader economy.
