AfCFTA: Why Investors, Manufacturers May Quit Nigeria

AfCFTA: Why Investors, Manufacturers May Quit Nigeria
• Business owners lament multiple taxes
• EFCC, FIRS use banks to block operators’ accounts

By Kenneth Jukpor

The Federal Government’s propensity to increase revenue has been tipped to push investors and manufacturers out of Nigeria, especially with the African Continental Free Trade Agreement (AfCFTA).

Although manufacturers have rightly highlighted shortage of power supply and poor transport infrastructure, foreign investors as well as their indigenous counterparts may flee from Nigeria as a result of excessive taxation that would make production in the country more expensive when AfCFTA is implemented.

Transport experts raised this concern at the 2019 MMS Transport Leadership lecture and awards last week, even as business owners lamented multiple taxation by the government.

Despite the already perplexed fiscal environment and the need for an enabling business environment with AfCFTA in view, there are indications that the Federal Government would increase Value Added Tax (VAT).

Recall that the government introduced the Strategic Revenue Growth Initiative to generate more revenues to finance national development earlier this year, as the Minister of Finance, Mrs. Zainab Ahmed said that the aim was to harmonize efforts of all the revenue generating agencies in increasing government’s coffers.

The Finance Minister had stated that the government was studying a possibility of a VAT increase from 5% to 10% to achieve sustainable revenue generation and maintain fiscal buoyancy and resilience.

“There would be a VAT increase during the course of 2019, we will announce later the items and what the rate will be. We will have to take a request to the National Assembly for amendment of the VAT law before it takes effect,’’ she said.
Speaking at the MMS Plus event last week, the Secretary General on Port State Control for West and Central African region, Barr. (Mrs.) Mfon Usoro stated that Nigerian manufacturers were afraid of AfCFTA because other countries in the region are more competitive.

“The problem is that Nigeria isn’t competitive because there are safeguards and other ways to stop other countries from dumping goods in your country. If you want a country to buy goods from Nigeria instead of going to buy from Togo, you have to make your price competitive. If your port charges are higher than the Togolese port charges, why would people prefer to buy from you? It is this fear and lack of competitiveness that makes Nigerian producers wary of what can happen under the AfCFTA. The point is – why aren’t we competitive?” Usoro said.

Elucidating on the challenges of taxation she said, “If I’m trying to do business in Nigeria and you’re charging me company tax of over 20% and in another country, for instance South Africa it is cheaper, it means the goods to be produced and traded in the African Free Trade Area would be cheaper, why would the investor come to Nigeria?”
She lamented that the government’s obsessive drive for revenue would see the nation increase VAT very soon.

“Nigeria is talking about increasing VAT, so that advantage we had in arguing for incentives in maritime trade will be gone because the taxes are too much and they make the industry not competitive when compared to other countries that can produce goods of top quality cheaper because their business environment is friendly. You must buy from other countries because you are signatory to the AfCFTA. Is it their fault that you refused to address these issues in your country?” she queried.

Meanwhile, there are allegations that the Economic and Financial Crimes Commission (EFCC) in collaboration with the Federal Inland Revenue Service (FIRS) engages commercial banks to block operators’ bank accounts..

A lot of innocent Nigerians who have been diligent in paying their taxes are victims of sudden restrictions on their bank accounts without any cogent reason.

Sharing her experience on this, the Chairperson, Nigerian Ship-owners Forum, Barr. (Mrs.) Margaret Orakwusi said, “I have had my accounts blocked and I’m sure it must have happened to you (Emeka Akabogu). The learned Senior Advocate of Nigeria (SAN) Mrs. Funke Agbor, we will be coming to brief you on this, even though they have released my account because I went to the bank. The government can’t clamp down on my account and put a figure. I have no business with the tax people because I pay my tax. If you feel it is not sufficient, go about it the right way”
Orakwusi lamented that Nigerian banks have become tax collectors for the government, warning Nigerians not to allow the banks restrict their accounts.

“Are we in a lawless society? Why should we allow all these to happen?” she asked.
Similarly, the Executive Vice Chairman, ENL Consortium, Princess Vicky Haastrup also narrated her ordeal on blocking of accounts, “The federal government is busy taxing us. Some weeks ago, they put a restriction on my account because they are looking for money. The federal government didn’t have a reason to put a restriction on the account. I audited the account and I pay my tax. They had to remove that restriction because I fought”

She lamented that the government only focused on generating revenue at all cost but they are not paying attention to where they can generate huge revenue by adding value.

“It makes me really sad for this country. I put the blame on the government and those in leadership” she added.

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