The media is somewhat awash with reports about broadening the government’s income base. It is commonsensical to grow inflow, flowing from the extant, age-old, and probably weather-beaten desire to diversify the nation’s revenue source from Oil. Agriculture, steel development, manufacturing, mining and quarrying, have among other sectors been proposed as future major determiners of the nation’s Gross Domestic Product (GDP).
In recent times, it has been partly pursuant to the promise of the Bola Tinubu administration to advance the GDP to one of a trillion-dollar economy in another seven years. While most of these plans are long-term, the short-term variants have come in the quest for the elusive portfolio investment, the recalibration of the payment system for improved effectiveness, and the latest talks around extending the contribution base of expatriates’ employment.
To be sure, the expatriates are supposedly highly skilled workers, putatively hired to do jobs that local expertise cannot do, or rather hired because of the exotic preference of the employer, and provided they can handle the cost implication. For now, just around $2000 is expected to be paid by every expatriate annually as a Combined Expatriate Residence Permit and Alien Card (CERPAC) fee. This is a statutory levy for permission to work.
The new argument is that beyond this level are the untapped opportunities of getting more income from the nearly 200,000 expatriates in the country, which could fetch between $1.5 billion and $ 2 billion per annum, from the activities of the skilled men, in what is supposed to be different from what they presently pay, and which every other citizen pays.
The plans are that if the nation needs to seek other ways of paying off its huge debt, manage its growing population, faced with declining resources and then mitigate the anxieties of filling the $3trillion gap required for its infrastructure in the next two decades, then it has to be much more creative and ingenious in raising revenue. The place of infrastructure cannot be overemphasized for being a tool for macro-economic stability, the creation of employment, enabling productivity and efficiency, social change and development of the rural areas, boosting trade and commerce and sustainable growth and development.
The other argument seems to be that the practice of making expatriates contribute more to a nation’s purse happens in countries like Singapore, Japan, and Cambodia, if to shore up the chances of locals, by discouraging foreign entrants into some sectors, where locals can thrive. There is also the question of nationalism, considering how migrants have become useful to many foreign economies even beyond what they pay, in addition to other huge financial commitments for naturalizations, and job-specific payments.
If these are done in other places, why can’t there be some semblances here in Nigeria? What is more? The proposed obligations from the expatriates shall be because their income is locally generated and a central contribution is necessary given that they are presently only obligated to the states. In many situations where they are mobile, tracking their payments is difficult. But this could be resolved with the overarching obligation to the centre.
As projected, an expatriate should be obligated on the aggregate amounts of his/her income for the year, from any salary, wage, fee, allowance or other gain or profit from employment including compensations, bonuses, premiums, benefits or other prerequisites allowed, given or granted by the employer to the expatriate.
Other than the factors highlighted, the need for more expatriates’ contributions has now arisen because expatriates and Nigerians should not be at par when it comes to liabilities on income as presently is, in addition to the fact that Nigeria has no special law governing revenue system with respect to expatriates, in a situation where a presumptive income due is required. Importantly, Nigeria is considered a very Expatriate Friendly country.
From the proposal, companies are understood to employ expatriates for the short or medium term to develop or train local employees. Once understudied, they are supposed to exit. But in actual practice, they stay unnecessarily longer. The anticipated increased financial obligation should discourage this anomaly.
The proposal leaves the government and citizens without any burden. It is also against the background of the fact that with Africa rising as an emerging market, more expatriates are coming in. The large markets from a large population and a greater influx of foreign skilled workers are in evidence, especially in a country like Nigeria.
Records have it that Nigeria’s natural resources and economic opportunities continue to attract foreign direct investments (FDI) from investors worldwide. Based on the National Bureau of Statistics, capital inflow to Nigeria in 2018 was $19.07 billion, of which $7.78 billion represents FDIs. Capital inflows from January 2019 to May 2019 amount to $14.2 billion, of which $2.87 billion represents FDIs. Beyond these facts is the thinking that the flow and people need to do more. Looks plausible, if probably practicalised.
In summary, the other benefits include an increase in employment rate and a lowering of the quest for foreign exchange, in addition to the inclusion of citizens where we do not require expatriates for construction, supermarkets, restaurants, and retail. The policy would likely also put these sets of Nigerians on a level playfield with the expatriates to some extent. There will similarly be lowered demand for scarce foreign exchange, especially from the parallel market, eventually reducing pressure on the currency.
Another instance is in the banking sector in Nigeria, which is 99% run by citizens. All the technology start-ups in Nigeria are also 99% Nigerian entrepreneurs’, where they harness skill sets and knowledge that are always available. So, there is no sector which cannot achieve this, including the Oil and Gas, Construction, Manufacturing, Retail Services, etc.
Revenue earned by the government can be put to use for the benefit of the Nigerians in many areas ranging from education, production, health and infrastructure, among others. Largely, with the initiative, there will be more job opportunities, improved remuneration, more chances for training and skill acquisition, enhancement of the prestige of the Nigerian workers, and reduction of the demand for Foreign Exchange, resulting from the draining salaries of expatriates.
…Revenue
● Mr Modupe, public policy analyst, writes from Abuja.
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