The troubling news of exit or scaling down of operations by multinational firms in Nigeria have become routine. On December 6, 2023, U.S. consumer goods powerhouse Procter & Gamble (P&G) announced the shutdown of its manufacturing operations, turning the country into an import market.
And this is coming just as Shoprite Mall announced that its Kano State branch will close on January 14, 2024. Jumia Food, a food-ordering platform, says it is stopping operations in Nigeria by December 31, 2023. Bolt Food had earlier taken the same decision.
Last month, Equinor Nigeria Energy Company (ENEC), a Norwegian energy corporation, which holds a 53.85% ownership in oil mining lease (OML) 128, including a 20.21% stake in Agbami field operated by Chevron, divested from its Nigerian operations, after three-decade presence in the country’s energy market.
And they have been long in coming. On August 3, 2023, Nigerians received the sad news as GlaxoSmithKline Consumer Nigeria Plc, popularly known as GSK, pulled out of its manufacturing operations from the country, appointing a third-party distributor to supply its imported consumer healthcare products.
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In March, Unilever Nigeria said it would prioritise “business continuity measures,” after announcing a planned end to the production of its popular brands, including Omo, Sunlight and Lux.
Companies that have exited Nigeria over the years include The Game owned by Massmart Holdings Limited, Shoprite, HSBC, UBS, Etisalat, Procter & Gamble, Truworths, ExxonMobil, Tiger Brands, HSBC, UBS, Woolworths, Iberia Airline and InterContinental Hotel Group. Also, iconic company brands like John Holt, Leventis and Kingsway have quit.
Adding to the gloomy terrain of foreign firms pulling out is the news report that over 50 Nigerian manufacturing companies have shut down in the last five years in in Lagos, Ota (Ogun State), Agbara (Ogun State), Jos (Plateau), Bauchi, Kano, Nnewi (Anambra State) and other parts of Nigeria.
According to the Nigerian Textile Manufacturers’ Association, Nigeria’s textile industry was hardest hit as between 1999 and 2009, 38 major textile companies closed down business in Nigeria.
The reality is that Nigeria, Africa’s largest economy with over 200 million people, is facing a mass exodus of multinational companies. That’s not good news.
They blame challenged business or unconducive operating environment, especially foreign exchange unavailability, high cost of raw materials, insecurity and general high cost of doing business.
Before 2023, the challenges faced by local and multinational manufacturers bordered on power crisis, constant devaluation of Naira, Forex availability coupled with other stringent policies of the government. It seems the inauguration of President Bola Ahmed Tinubu on May 29, 2023 and his “bold reforms” of fuel subsidy withdrawal and naira devaluation has exacerbated the situation.
The reforms have unarguably affected the multinationals whose businesses largely depend on forex availability and the purchasing power of Nigerians, which has largely been eroded.
President Bola Ahmed Tinubu, in different fora both local and international, has continued to urge investors to consider the many economic potentials of the country. But the exodus or divestment of multinational companies in Nigeria is sending contrasting signals to the same prospective investors.
Daily Trust, therefore, calls for a halt to further exit of multinational companies, after all, Nigeria used to be a haven where foreign and local investments throng and thrive. No company, no matter how little, should be allowed to close, or exit from the country as it brings dislocations to the economy of the country.
We also call on the federal government to urgently look into the factors making these foreign firms to quit the nation’s business scene and ensure the right environment is enthroned for their operations.
There is no reason why Nigeria should have the image of a graveyard for flourishing companies. That’s a disheartening vote of no confidence and a perpetuation of a narrative that Nigeria can no longer sustain future growth.
It is therefore imperative for the federal government to urgently review the impact of its economic policies on existing enterprises to enable them sustain their businesses. Any policy that leads to the closure or exit of existing firms is bad for the economy as it also forecloses or impedes foreign investments.
Moreover, both the federal and state governments should prioritise the provision of infrastructure and major improvement in power supply to reduce the cost of doing business in Nigeria. It is time for the federal government to fix all pending issues militating the smooth operations of the nation’s manufacturers including the exchange rate, difficulty in repatriating profits, smuggling and importation of fake and adulterated products.
Daily Trust also calls for diligent implementation of the ease of doing business initiatives to make the business environment friendly. Nigeria must attract, sustain and not extinguish existing industries and firms.
Moreover, it is time for the government to give priority to consolidation of the local manufacturing industry as they are really the only loyal base because in a challenged environment, they won’t vote with their feet. They will put on their patriotic armour and weather the storm for the benefit of Nigeria.
