Foreign companies, particularly manufacturers and energy firms, are departing Nigeria, citing the current foreign exchange crisis and Naira devaluation as major reasons. This has resulted in reduced earnings for foreign companies in Dollar terms.
Many are scaling down operations, transferring ownership, or selling their stakes. The recent sale of Diageo’s 58.02% shareholding in Guinness Nigeria to Tolaram Group on June 11, 2024, is a notable example.
In 2020, over 10 companies shutdown operations, including well-known names like Standard Biscuits Limited, NASCO Fiber Products Limited, Union Trading Company, UTC Nigeria PLC, and Deli Foods. This trend continued in 2021, with more than 20 companies exiting, including Tower Aluminium Nigeria PLC, Framan Industries Limited, Stone Industries Limited, Mufex Nigeria Company Limited, and Surest Foam Limited.
The exodus continued in 2022, with over 15 known brands leaving Nigeria, including Universal Rubber Company Limited, Mother’s Pride Ventures Limited, Errand Products Nigeria Limited, and Gorgeous Metal Makers Limited. In 2023, more than 10 major companies left, notably Unilever Nigeria PLC, Procter & Gamble Nigeria, GlaxoSmithKline Consumer Nigeria Limited, ShopRite Nigeria, Sanofi-Aventis Nigeria Ltd, Equinox Nigeria, and Bolt Food & Jumia Food Nigeria.
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In the first six months of this year, five listed major companies had left Nigeria, including Microsoft Nigeria, Total Energies Nigeria (affected by its divestment), PZ Cussons Nigeria PLC, Kimberly-Clerk Nigeria, and Diageo PLC. “The exit of multinational corporations from Nigeria has become a persistent and troubling trend. As one of Africa’s economic powerhouses, Nigeria is at risk of losing its stature as multinationals, the primary drivers of foreign direct investment, depart at an alarming rate.”
According to economist Vincent Nwani, the cumulative lost output due to these multinational exits is estimated to be N95 trillion since 2020.
While foreign exchange scarcity, Naira decline, poor infrastructure, power supply issues, and exorbitant energy costs are often cited as reasons for the exits, there are deeper issues at play. These include the rise of the “frenemy” economy and regulatory issues.
Recently, Minister of Finance and Coordinating Minister of the Economy, Wale Edun, stated that the government is working to improve the economic and investment climate to attract more multinationals into Nigeria.
Economists want the President Bola Tinubu-led government to address the root causes of the multinationals’ exit to bring about economic relief.
The undeniable economic and social damage will manifest in increasing unemployment rates, potentially leading to further social unrest. Nigeria’s beauty appears to be fading as multinational corporations, some of which have operated here for decades, are leaving.
The news has spread far and wide, causing celebration among Nigeria’s competitors. Yet, all is not lost. Experts are of the view that the country must take prompt actions and calculated steps to rescue the economy and stop the continuous departure of major multinational corporations.
Simultaneously, the country should also focus on developing domestic companies.
(Editor: Terverr Tyav)
