Expatriate Employment Levy: A Case Of Kobo Wise, Pounds Foolish-Dr Muiz Banire, SAN

On Wednesday, the 28th of February, 2024, I woke up to a WhatsApp message from a friend of mine who runs a business with 23 expatriates and over 95 Nigerians in Lagos. The message displayed what was described as a Handbook on Expatriate Employment Levy (EEL) allegedly published under the head banner of the Ministry of Interior, with the Nigeria Immigration Service as an adjunct.

Obviously, the handbook containing the policy is meant to spell out the details of the administration of the newly introduced policy of a mandatory contribution by way of a levy imposed on employers of expatriates in Nigeria.

By the policy, employers of labour are under compulsion to pay the sum of 15,000 United States dollars for their directors and 10,000 USD for other categories of employees annually. Expatriates liable are those with a record of employment of not less than 183 days in aggregate in the country. According to the federal government, the rationale behind the policy is essentially to protect the local workforce, among other targets, aimed at the promotion of skills transfer and knowledge sharing.

My perception of the scheme is to implicitly compel the employers of these expatriates, if suffocated, to ensure knowledge sharing with the local workers, including skills transfer. From the said manual also appear the following policy objectives: to balance economic growth and social welfare, again targeted at safeguarding the interests of the local workforce; to enhance the collaboration between the public and private sectors; and lastly, as an objective of the policy, to ensure the prioritization of local talent acquisition over that of the expatriates. Interestingly, where there is even a cross-border assignment and secondment of such expatriates, the employer will still be liable insofar as the expatriate quota of such an employee remains on the record of the company in Nigeria.

For the purpose of ensuring compliance with the dictates of the policy and the enforcement of the penalties specified thereunder, the Nigeria Immigration Service is saddled with the responsibility of enforcement. This responsibility includes the determination of those covered by the policy, that is, the employers/employees affected by the policy. In addition, expatriates themselves, are expected to ensure that their employers file not only the relevant information by way of personal details but that the information is truthful and verifiable.

The policy was launched by the President of the Federal Republic of Nigeria, President Bola Tinubu, on Tuesday, the 27th of February, 2024. Originally, the compliance date was set for the 15th of April, 2024, before a purported suspension. Upon my digestion of the policy, I could not but intervene urgently in my leadership series via my X account on Sunday, the 3rd of March, 2024. In the said conversation, I raised many matters arising from the policy. Although I am aware, through the unusual channel of the National Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), that the policy has been suspended, the notification of suspension not originating from proper custody, I still believe that there are many issues germane for consideration in any future attempt to review, more so when what took place is a suspension and not a reversal.

The first of the many issues pertains to the legislative competence of the executive to issue a policy that borders on taxation. To impose such a levy, particularly when it is not voluntary, the stamp of the parliament is simply required without boring you with any legalism. It is either that the legislature enacts the policy into law, or it comes by way of regulation where such power is enabled in the parent instrument. Even where such latitude is given in the Law, the National Assembly still needs to endorse the regulation by way of resolution. I am not aware that this has been done. This is a policy, as given above, that not only imposes a tax but creates offenses. To my mind, this is unlawful if not illegal.

Secondly, the imposed sum is specified in the United States currency while the entities to be affected, the employer company, transacts in naira. By Nigerian law , transacting in foreign currency in Nigeria is still illegal. Is the government saying by this policy that she is above the rule of law? It would have been reluctantly permissible if the equivalent sum were even specified in naira; alas, this is not so. In addition, the conversion of naira to dollars to pay the levy will further exacerbate the precarious situation of the local currency. How then are we helping the country by this policy? God save Nigeria.
Thirdly, if truly the rationale behind the policy is the protection of the local workforce, the government needs not reinvent the wheel as there are already a sufficient number of laws, orders, and policies that has accounted for this. The Nigerian Immigration Act already addressed the question in the issuance of a residence permit. The Executive Order issued on the 2nd of February, 2018, by the then President Buhari, is still extant, and although primarily meant for planning and execution of projects, promotion of Nigerian content in contracts, and science, engineering, and technology, the actual mandate far surpasses what it portrays.

The mandate, to a large extent, virtually addresses everything to do with local content. For example, Paragraph 1 (7) of the Executive Order obligated the Ministry of Interior not to grant visas to foreign workers whose skills are readily available in Nigeria. Paragraphs 7 (2) and 11 are equally relevant. Under the Order, all professionals are expected to register with local professional bodies before absorption. The executive order is reviewable every five years, which implies that, should additional regulation by expansion is required, it can be done under it. The Order is still extant albeit yet to be reviewed as specified. It seems the current administration is oblivious of its existence, suggesting a disconnect. With respect to sanctions, the Executive Order rightly referred to penalties provided under the other legal instruments, unlike the situation under the present policy directives. The harbingers of the current policy should emulate the approach as that is the only lawful way of attaining the objective. Moreover, by way of policy, before the combined expatriate residence permit and aliens’ card is issued by the Immigration Service, those criteria of protecting the local workforce are presumed to have been complied with. Upon issuance of the permit, the expatriate pays 2,000 dollars annually as fees; the dollar denomination is tolerable in this instance as it is payable by the employee who earns in dollars, unlike the employer. In terms of technology transfer, the NOTAP Act is there which makes it impossible for a foreign investor to recoup his income where an agreement is not registered with NOTAP. The import of all the foregoing is that the field is already covered vis-a-vis the objectives of the new policy by the previous instruments. Assuming without conceding that there are still major lacunae, the bill sponsored during the last Assembly at the National Assembly on local content; interestingly and coincidentally sponsored by the then Speaker, now Chief of Staff to the President, can be revisited to address the concerns of the new policy. Rationality would have dictated the pursuit of the passage of that bill, which is more comprehensive, than fumbling with illegal policy options. Strangely, before the launch of the policy, the Chief of Staff must have certainly been in the know. Did he forget the bill he personally sponsored while in the House? What a coordination! What is the wisdom in proliferating regulations all over the place? Is there nobody in charge of the coordination of the policies of the government? There is a glitch apparently here. Now, leaving the regulatory aspect for the substance. For over a decade, the federal government, in company with the Governors, has been junketing all over the world in search of foreign investments into the country’s economy. No one needs any soothsayer to tell one that without a conducive atmosphere, the ambition will continue to be a mirage. It is in this context that one wonders how friendly is the new policy towards the attraction of foreign investments into the country. Who sets up a business in a new and strange territory without first importing its operators until such time that the business is stable enough to accommodate the locals? Certainly no one. When suddenly, beyond the annual payment for the permit, the company now has to pay an additional compulsory levy, would that constitute an attraction so as to engender a conducive atmosphere?

I am wondering what was on the mind of the thinkers of the policy. It is easily inferable that they certainly are not expecting this to induce foreign investments into the country. Strangely again, as the President is sojourning globally for investments, back home, policies such as this that will drive away such investments are being embarked on. This is apart from the fact that the rule of law is yet to be entrenched in the country. No genuine investor invests in an environment where the rule of law is not adhered to. Someone needs to whisper this reality to the President so that the well-intended foreign trips to attract investments would not continue to be meaningless. The country must fix the judiciary in the various manners we have articulated elsewhere. Only fraudulent investors will continue to be attracted by this kind of policy. Furthermore, assuming again without conceding that the legal premise is valid and that the levy is desirable, who ultimately bears the burden? Is it not the same Nigerian consumer that is groaning already in pains as a result of economic strangulation? Certainly, the levy will be passed on to the consumers and will not net out anything from the employer. Why are we insensitive to the yearnings and pains of Nigerians? Why are we bent on increasing their sorrows? If only we can appreciate the multiplier effect of the levy on them, we won’t be toying with it. This is simply a vicious circle. The net effect of the policy will further lead to loss of more jobs. As with the friend that triggered my thoughts on this issue, since she could not afford the levy, she will pack up the business, 23 expatriates return to their countries while 95 Nigerians lose their jobs. Are we helping the country by creating more insecurity through joblessness? This is simply a case of kobo wise, pounds foolish. Nigeria derives more woes than joy from this type of policy. In my earlier intervention of the 3rd of March, 2024, alluded to above, I had concluded by advocating the urgent reversal of the policy with a view to rethinking the essence. I am not aware that the officials of the government must have read the intervention prior to the masqueraded suspension; otherwise, wisdom and good reasoning would have dictated the cessation of the policy completely. This is the first time that a private organization that never institutionalized a policy will be announcing the suspension on behalf of the government that introduced it. Wonders shall never end! In the press release, NACCIMA states: “The Nigerian Association of Chambers of Commerce, Mines, and Agriculture (NACCIMA), in collaboration with key stakeholders, announces a temporary suspension of the recently enacted Expatriate Employment Levy (EEL) by the federal ministry of interior, as administered by the Nigerian immigration service”. It is important to note the word, ‘enacted’, which suggests that the Ministry is now a parliament. This exposes and validates the unlawfulness of the policy. Now, is it that the government is ashamed of undertaking the announcement; or just strategic in ambushing the affected entities, so as to summersault in the future? I am still at a loss on this. The implication, to my mind, is that the policy is still extant, and the government is yet to tamper with it in any form. What this means is that there is no room for joy on the part of the affected entities. I, once again through this medium, advocate the complete abrogation of the policy. If anything, let the earlier presented bill on local content alongside the Executive Order be adopted through streamlining and enactment. In concluding, I doubt the complicity of the Hon. Minister in this venture probably because of my admiration for him. In terms of delivery under the present government, his programs, netting out this, remain the flagships of the administration. Should he be involved, I salute his courage to revisit the policy exempting the fact that abrogation rather than suspension is the right option. No human being is perfect as I would want to regard this as experiment gone bad. Please be courageous to admit and reverse absolutely. The policy is neither in the interest of the country nor the citizens.