The Manufacturers Association of Nigeria (MAN) has expressed grave concerns regarding the recently amended Financial Reporting Council of Nigeria (FRCN) Act, specifically citing the “astronomical” annual charges imposed on private companies. MAN argues that these new financial burdens, particularly those targeting non-listed companies, present a significant threat to the already struggling manufacturing sector. Previously, publicly listed companies faced a maximum annual charge of N1 million. The amended Act has drastically increased this charge to N25 million. Even more alarming, non-listed companies, which were previously exempt, now face an uncapped charge linked to their annual turnover, regardless of profitability. This represents a substantial and potentially crippling financial burden for many manufacturers already operating under challenging economic conditions.
The core of MAN’s concern lies in Section 33 of the amended Act, which mandates an annual charge for non-listed companies based on a percentage of their yearly turnover. For companies with a turnover exceeding N10 billion, this charge can reach as high as 0.05% of their revenue. MAN argues that this adds another layer of financial strain on manufacturers already grappling with forex scarcity, high inflation, and a complex system of multiple taxation. The association views this new charge as excessive and ill-timed, potentially stifling investment and further hindering the growth of the productive sector. The Director-General of MAN, Segun Ajayi-Kadir, characterized the Act as “draconian” and lamented the lack of choice for companies facing these new charges. He warned that the cumulative effect of these financial burdens could significantly impact investment and hinder the growth of the productive sector.
Beyond the financial burden, MAN takes issue with the punitive measures introduced by the amended Act for non-compliance. The Act stipulates severe penalties for defaulters, including a monthly fine of 10% of the unpaid fee and the possibility of imprisonment for company executives. MAN contends that these penalties, particularly the threat of imprisonment, are disproportionate to the nature of the offense, which is essentially non-payment of an administrative fee. They argue that such stringent penalties are typically reserved for cases of deliberate defiance or fraud, not for failure to pay administrative fees. The association believes that these measures create an environment of fear and intimidation rather than fostering a supportive regulatory environment conducive to business growth.
MAN’s primary concern is the potential detrimental impact of these new charges on the manufacturing sector. The association argues that imposing this additional financial burden at a time when manufacturers are already facing numerous economic challenges, including forex scarcity, high inflation, and multiple taxation, could severely cripple the sector. They contend that these cumulative pressures could stifle investment, hinder growth, and ultimately undermine the government’s efforts to improve the ease of doing business in Nigeria. The association stresses the importance of a supportive regulatory environment for the growth of the manufacturing sector and warns that the new charges could have the opposite effect, potentially discouraging investment and hindering growth.
MAN has called for government intervention to suspend the implementation of these charges and urged the FRCN to align its policies with the ongoing tax reforms initiated by President Tinubu. The association believes that suspending the charges would provide much-needed relief to struggling manufacturers and demonstrate a commitment to creating a more conducive business environment. Furthermore, MAN suggests that aligning FRCN policies with broader fiscal policy and tax reform objectives would streamline the regulatory landscape, reduce complexities, and promote a more coherent approach to economic development. They believe that this alignment would be beneficial not only for the manufacturing sector but for the overall economic growth of Nigeria.
Ultimately, MAN emphasizes its commitment to supporting a business-friendly regulatory environment in Nigeria. The association urges authorities to reconsider policies that could hinder industrial growth and advocate for measures that promote investment, innovation, and sustainable development within the manufacturing sector. They maintain that a collaborative approach between the government, regulatory bodies, and the private sector is essential to create a conducive environment for businesses to thrive and contribute meaningfully to the Nigerian economy. MAN’s appeal highlights the need for a balanced regulatory approach that supports economic growth without imposing undue burdens on businesses, particularly those already facing significant economic challenges.
