Expatriate Levy: Why NECA, Others Should See The Good Side

In a globalized world, the movement of labour across borders has become commonplace. Nigeria, like many other nations, has experienced an influx of expatriates contributing to its workforce. While foreign expertise can be invaluable for economic growth and development, it is crucial to ensure that the employment landscape remains fair and equitable for all stakeholders. The introduction of the Expatriates Employment Levy (EEL) in Nigeria aims to address this concern while fostering domestic skill development and enhancing national development efforts.

The presence of expatriates in Nigeria’s labour market can sometimes lead to challenges such as unfair competition, potential exploitation of local labour, and a drain on resources. Without proper regulation, there is a risk that local talent may be overshadowed or sidelined, hindering the country’s long-term development goals. The EEL serves as a mechanism to regulate the employment of expatriates, ensure that their presence complements, rather than undermines, the efforts to build a skilled indigenous workforce.

One of the primary objectives of the EEL is to incentivize investments in local capacity building and skill development. By imposing a levy on the employment of expatriates, the government aims to encourage employers to prioritize the training and development of Nigerian talent. This not only creates opportunities for local professionals but also strengthens the overall competitiveness of the workforce, leading to sustainable economic growth.

The revenue generated from the EEL can serve as a significant source of funding for various national development initiatives. These funds can be channeled towards education, healthcare, infrastructure development, and other sectors crucial for Nigeria’s socio-economic progress. By tapping into the resources generated from expatriate employment, the government can alleviate fiscal pressures and invest in programmes that benefit the entire population.

Equity in the labour market is essential for social cohesion and stability. The imposition of the EEL helps level the play-field by discouraging the over-reliance on foreign labour at the expense of local talent. This not only fosters a sense of inclusivity but also promotes social justice by ensuring that all members of society have access to employment opportunities and fair wages.

In addition to economic considerations, the regulation of expatriate employment also has implications for national security. An unregulated influx of expatriates can pose security risks, as seen in some instances of illegal immigration and associated criminal activities. By implementing the EEL, the government can exercise greater control over the inflow of foreign workers, thereby mitigating potential security threats and safeguarding the nation’s interests.

The introduction of the EEL in Nigeria represents a proactive step towards fostering a balanced and sustainable labour market. By regulating the employment of expatriates, promoting local capacity building, generating revenue for national development, and ensuring fairness and equity, the EEL serves as a vital tool for advancing the country’s socio-economic objectives. While acknowledging the valuable contributions of expatriates, it is imperative to prioritize the empowerment of Nigerian talent and foster an environment conducive to inclusive growth and development.

One of the primary arguments against the EEL is its purported adverse effects on the manufacturing sector. Critics contend that the levy will further burden manufacturers already grappling with numerous challenges, including low-capacity utilization, high interest rates, and a scarcity of foreign exchange. Additionally, the claim that hundreds of manufacturing companies have become distressed or shut down due to these challenges underscores the severity of the situation.

However, it is important to recognize that the EEL is not the sole cause of the manufacturing sector’s woes. While it may contribute to increased operating costs, it is but one factor among many affecting the industry. Addressing the underlying issues plaguing the manufacturing sector, such as infrastructure deficiencies, regulatory barriers, and inadequate access to finance, requires a comprehensive approach that goes beyond the scope of the EEL.

Moreover, the argument that the EEL violates international trade agreements and could lead to retaliatory measures against Nigerian workers abroad overlooks the rationale behind the levy. The EEL aims to address wage disparities and promote local employment in foreign-owned companies, which align with the broader goal of fostering economic growth and reducing dependence on expatriate labour. While concerns about potential repercussions on Diasporic Nigerians are valid, it is essential to weigh these against the long-term benefits of promoting local employment and economic empowerment.

Furthermore, the assertion that the EEL may prompt foreign companies to relocate to neighbouring countries with more favourable business environments warrants closer examination. While it is true that businesses consider various factors, including operating costs, when making investment decisions, Nigeria’s vast market potential and strategic location within the West African region remain compelling attractions for foreign investors. Rather than view the EEL as a deterrent to foreign investment, it should be seen as a measure aimed at creating a level playfield and incentivizing companies to prioritize local talent and resources.

In conclusion, while the concerns raised about the EEL are legitimate, it is important to approach this issue with nuanced perspectives and /or perceptions. Rather than view the EEL in isolation, it should be seen as part of a broader strategy to address systemic challenges and promote sustainable economic development in Nigeria. By fostering dialogue and collaboration among government, industry stakeholders, and the private sector, Nigeria can navigate the complexities of policy implementation while charting a path towards inclusive growth and prosperity for all.

While the concerns raised by Nigeria Employers’ Consultative Association (NECA) and other organizations regarding the expatriate employment levy (EEL) are understandable, there are several counterarguments to consider, especially from the standpoint of labour or employees who stand to reap the cornucopian benefits of the policy: The imposition of the expatriate employment levy serves as a means to regulate the employment of expatriates in Nigeria. By implementing this levy, the government aims to ensure that the employment of expatriates is justified and contributes to the development of local talent. Without proper regulation, there is a risk of companies excessively relying on expatriate workers at the expense of local employment opportunities.

Nigeria, like many other countries, faces significant fiscal challenges. The revenue generated from the expatriate employment levy can contribute to addressing these challenges by providing additional funds for essential services and infrastructure development. This revenue can be instrumental to supporting various socio-economic programmes that benefit both expatriates and Nigerian citizens alike. The imposition of the expatriate employment levy ensures that companies employing expatriates bear an appropriate share of the costs associated with hiring foreign workers in spite of the EEL. This helps to level the play field between local and foreign businesses, prevent unfair competition and ensure that Nigerian companies are not disadvantaged in the employment market.

By imposing fees on companies employing expatriates ($15,000 per annum for directorate level worker and $10,000 per annum for other categories), the government incentivizes these companies to invest in training and developing local talent, which is largely party of the economics that could benefit both parties. Employ local talent at a cheaper cost, but if you must bring in your expats to do the job that a Nigerian can do, then pay the levy on that one expat. This can lead to the transfer of skills and knowledge from expatriates to Nigerian workers, and ultimately enhance the country’s human capital and promote economic development in the long run. Sustainable fiscal policies are crucial for the long-term economic stability of any country. While the expatriate employment levy may face initial resistance from businesses and investors, its implementation demonstrates the government’s commitment to fiscal sustainability and prudent economic management. Over time, as the benefits of the policy become apparent, concerns about its impact on foreign investment are likely to diminish.

Mr Ojeifo, journalist and publisher of THE CONCLAVE online newspaper, can be reached at [email protected]

Disclaimer: This article is entirely the opinion of the writer and does not represent the views of The Whistler.