The Nigeria Employers’ Consultative Association has warned that the Ministry of Interior’s expatriate employment levy will discourage investment in the economy.

The association also faulted the levy, saying there would be a need for certain regulations to be put in place before such tax could accepted.

The leadership of NECA made this cleared on Sunday, stating that following the launch of the Expatriate Employment Handbook, an initiative of the Federal Ministry of Interior, claiming to enhance skills transfer in Nigeria, the new levy would frustrate the Federal Government’s ongoing fiscal and monetary reforms if enforced.

According to the Director-General of NECA, Adewale-Smatt Oyerinde, “It will also serve as a disincentive to Foreign Direct Investment among many other unintended negative consequences.

“The levy of between $10,000 to $15,000 on employers that employ expatriates when Nigeria is actively seeking FDI is not only exploitative and extortionist but also a contradiction that cannot be explained.”

“While we support the Federal Government’s objective of developing the local workforce, we have been at the forefront of promoting skills transfer, technical skills development, and employment generation.

He noted that, “However, the recently launched initiative of the Ministry of Interior has the potential to create more fundamental economic and socio-labour distortions.“

“The imposition of US$15,000 and US$10,000 on organisations that employ expatriates at a time when businesses are shutting down and leaving the country in droves is worrisome. Recent results of many businesses have shown massive losses, a situation that could potentially increase the level of unemployment with dire socio-economic consequences.”

Oyerinde stressed that, while raising organized businesses concern on the legality and appropriateness of the levy, “We are concerned at the legality and appropriateness of the Expatriate Employment Levy as well as its effect on the economy. The provisions of a Handbook can never override clear provisions of extant laws in Nigeria, especially the 1999 Constitution of the Federal Republic of Nigeria, Immigration Act, and the Local Content Act among others.”

According to him, the Ministry of Interior and indeed, government cannot urges a tax or levy without appropriate legislation.

He stressed that, “For instance, Section 59 of the Nigerian Constitution requires that any imposition of tax, duty, fee, or levy must be backed by an Act of the National Assembly. Levies that are imposed without complying with the provisions of section 59 of the Constitution offends the Constitution and are illegal.”

The NECA chief also noted that “existing legislations, such as the Local Content Act and Immigration Act have already addressed objectives like those of the EEL Handbook – thus, covering the field. Therefore, the introduction of additional levies is an unnecessary duplication and could impede the ease of doing business in Nigeria.”

Oyerinde added that “the levy, if implemented, will not only distort, and frustrate the ongoing efforts at clear reform of the Fiscal and Monetary space but also contradicts and render ineffective the President’s ongoing quest for Foreign Direct Investment. Furthermore, a reciprocal implementation of the same policy by other countries will have dire consequences on the careers and progress of Nigerians who are expatriates in other nations.”

As a result, he advised that the government devices means to strengthen existing regulatory institutions responsible for managing expatriate employment rather than imposing additional levies, thus ensuring a more responsive and accountable regulatory framework in the implementation of extant laws.

In order to draw in both domestic and foreign investors, he also mentioned the implementation of fiscal incentives to boost business stability, make investments more alluring, and give priority to initiatives that make conducting business easier.

Oyerinde solicited for collaborative efforts between the government and private sector to explore alternative revenue streams while promoting wealth creation through dialogue and stakeholder engagement.

While acknowledging the government’s objectives, Oyerinde emphasized the necessity for policies that promote a favorable investment climate without placing undue pressure on companies.

Working together, the public and private sectors can achieve equitable outcomes that advance economic interests and long-term corporate expansion.