Manufacturers Association of Nigeria (MAN) has said that 767 manufacturers shut down operations while 335 became distressed in 2023.
This came against the backdrop of exchange rate volatility, rising inflation and other economic challenges that have worsened the investment atmosphere.
The association stated this in a statement in which it condemned the recently introduced Expatriate Employment Levy (EEL) by the Federal Government.
MAN said it was struck with disbelief, seeing that the levy runs contrary to President Bola Tinubu’s Renewed Hope Agenda and the kernel of his Fiscal Policy and Tax Reform initiative.
According to MAN, the unintended negative consequences on the manufacturing sector are humongous and cannot be accommodated at this time of evident downturn in our economy.
The statement reads in part: “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. The manufacturing sector is already beset with multidimensional challenges. In the year 2023, 335 manufacturing companies became distressed and 767 shut down.
“Capacity utilisation in the sector has declined to 56 per cent amid rising interest rates and scarcity of forex needed to import raw materials and machinery.
“Inventory of unsold finished products has increased to N350bn and the real growth has dropped to 2.4 per cent.”
MAN also said it was concerned that the EEL contradicts our international trade agreements and the obligations contained therein.
“Nigeria is a signatory to the African Continental Free Trade Area agreement, which seeks to promote the free movement of skilled labour across the continent, which is complemented by non-discriminatory measures against fellow Africans.
“We are worried that the introduction of the levy could trigger retaliatory measures against Nigerians working across Africa and other nations of the world and may also frustrate regional integration efforts and portray Nigeria as a spoiler among her peers.
“We are equally worried that the imposition of such a levy could have far-reaching implications for our national economy and potentially exert pressure on our national currency could be introduced through a Handbook, rather than a law enacted by the National Assembly.
“This levy, if not reversed, might expose the Federal Government to a plethora of lawsuits that would distract Government from the task of salvaging the current dire situation of our economy,” the statement added.
In its recommendation, MAN urged the president to direct that the implementation of the Expatriate Employment Levy be discontinued.