Nigeria Employers’ Consultative Association
The fate of many businesses in Nigeria currently appears to hang in the balance.
With the rising spate of insecurity, depreciating value of the naira, rising inflation and increasing multiple taxations, the ease of doing business in the country is indeed experiencing serious challenges.
These issues were recently brought to the fore by the Nigeria Employers’ Consultative Association (NECA) which hinted that most businesses in Nigeria are now on the brink of collapse under the pressures from the economic policy environment.
The specific claim by NECA of multiple taxations on enterprises is quite instructive and worthy of further investigation. According to NECA, businesses in Nigeria are confronted with over 50 different taxes, levies and fees at all tiers of government, some of which are duplicated, militating against the survival of businesses nationwide. This is quite instructive.
Notable taxes and levies of general application include the National Information Technology Development (NITDA) levy, Tertiary Education Tax, National Social Insurance Trust Fund (NSITF), Company Income Tax (CIT), Television and Radio Licence fee, Local Content Levy and Stamp Duty among many others.
In addition to all these, there are over five different bills at the National Assembly seeking to impose various taxes and levies on organised businesses in the country. This could be quite suffocating for any business.
Is it then any wonder that the survival and growth of small and medium-sized enterprises are currently under serious threat, being truncated largely by unfavourable government policies? The negative effects of these on businesses are overwhelming despite the various public displays of support for these categories of businesses by the authorities.
The consequent and obvious implications these have had on the level of employment and job creation as well as on national output and the level of inflation in the economy are there for all to see. Obviously, it is in the best interest of the government to protect the real sector rather than to tax it out of existence.
The lamentation of NECA is not limited to the multiplicity of taxes in the economy. Other issues highlighted that are worthy of attention in relation to the above include the perennial shortage of the much-needed foreign exchange for the importation of inputs into the production process as it particularly applies to the manufacturing sector.
The related depreciation of the naira in relation to the United States dollar and other foreign currencies is also disturbing. Other causes of worry include the stringent regulatory environment as well as the non-alignment of the country’s monetary and fiscal policies which combined with the other aforementioned factors make doing business in the country very difficult.
Aside from the issues raised by NECA, it is indeed evident that the seeming perennial energy crisis in the country, particularly as it applies to businesses is counterproductive. These, alongside other factors, have become obstacles in manufacturing firms attaining the desired level of capacity utilisation rate. This has generally lowered the anticipated level of output of businesses across the sectors in relation to their contribution to GDP, employment and reduction in the level of product prices.
Government needs to address these challenges confronting businesses in the country if it is serious about minimising the incidence of job losses and poverty reduction. In a situation where foreign investors are increasingly finding the Nigerian economy unattractive in bringing in new capital, the least the government can do is to ensure that local investors and businesses are not discouraged from contributing their own quota to the growth of the economy.
As things stand, it is increasingly becoming doubtful if the country will be in a position to benefit from the African Continental Free Trade Agreement (AfCFTA). Obviously, only countries that have goods and services to offer the continent can make the best of the AfCFTA arrangement and not those with dwindling private sectors with limited hope of survival of their private sectors.
Government needs to pay attention to the issues raised by NECA. Multiple taxations can be addressed by the government making an effort to expand the tax net and pry its eyes into the activities of the informal sector as well as the ultra-rich in its quest to raise more revenue for the implementation of its annual budget.
More revenue can be generated thereby than by further taxing businesses and individuals who are already groaning under the current weight of taxation. It also needs to frontally address the nauseating issue of oil theft in the country.
This has currently grown to unpardonable proportions. Addressing this issue is very critical to the survival of the nation. Also the unbridled level of public debt accumulation is disturbing and should be arrested. The implication of this for the survival of businesses through the enhancement of macroeconomic stability is unquestionable.
Finally, the vexatious issue of fuel subsidy should be dispensed with in 2023 so as to give the economy and the various businesses the much-needed breathing space for survival.
The Guardian
