Nigeria’s business community faces heightened financial strain due to the Financial Reporting Council of Nigeria’s (FRCN) recent implementation of increased levies under the Financial Reporting Council Amendment Act 2023. These changes significantly raise the financial obligations of private companies, exacerbating existing economic challenges.​

Substantial Fee Increases for Private Companies

The amended Act mandates that non-listed entities pay annual charges based on a percentage of their annual turnover. For companies with a turnover exceeding N10 billion, the fee can reach up to 0.05% of their turnover. In contrast, publicly listed companies have their fees capped at N25 million annually. This disparity has raised concerns about the fairness of the policy, as it appears to disproportionately affect private firms operating on thinner margins. ​

Manufacturers Association of Nigeria’s Objections

The Manufacturers Association of Nigeria (MAN) has voiced strong opposition to these new levies. MAN’s Director-General, Segun Ajayi-Kadir, highlighted that many non-listed manufacturing firms, now classified as Public Interest Entities (PIEs), are subjected to these hefty financial obligations. He emphasized that this move contradicts the government’s commitment to improving the ease of doing business in Nigeria. ​

Economic Implications and Business Closures

The introduction of these levies comes at a time when the manufacturing sector is already under significant strain. In 2023, approximately 767 manufacturing companies ceased operations, and 335 others faced distress. Factors contributing to these challenges include exchange rate volatility, rising inflation, and a generally unfavorable investment climate.

Rising Unsold Inventory and Operational Costs

Manufacturers are also dealing with a surge in unsold inventory, which reached N1.24 trillion in the first half of 2024—a 357.57% increase compared to the same period in the previous year. This rise is attributed to declining consumer purchasing power amid escalating inflation and the devaluation of the naira. Additionally, the cost of alternative energy sources has escalated, with manufacturers spending N238.31 billion on alternative energy in the first half of 2024, a 7.69% increase from the previous half-year. This surge is driven by higher prices for diesel, gas, and other energy sources, coupled with the need to invest in self-energy generation due to unreliable power supply from the national grid. ​

Call for Policy Reassessment

Industry stakeholders are urging the FRCN to reconsider the implementation of these levies. They argue that imposing such financial demands during a period of economic downturn could lead to further business closures, increased unemployment, and a decline in investor confidence. The call is for policies that support business sustainability and economic growth, rather than measures that may stifle entrepreneurship and industrial development.​

Conclusion

The FRCN’s new levies have introduced additional challenges for Nigeria’s business community, particularly for private companies already navigating a complex economic landscape. As the country strives for economic resilience, it is imperative for regulatory policies to align with the broader goal of fostering a conducive environment for businesses to thrive.