Nigeria, despite being the largest economy in Africa – with over 200 million population, is lately facing a mass exodus of multi-national companies. One of such companies, Unilever, an off-shoot of UAC founded in 1923, four other multi-national companies, has alsoannounced their exit from Nigeria before May next year.
Many of these companies have spent decades doing business in Nigeria, while others are folding-up operations barely 3 years after announcing their arrivals.
From January 2023 till date, no fewer than seven multi-nationals have either left or announced their decision to exit the country by December. While the President, on many occasions, continued to urge investors to consider the many economic potentials of the country, the exodus or divestment of multinational companies in Nigeria keep sending contrasting signals to prospective investors.
Before 2023, some of the challenges faced by local and multinational manufacturers in Nigeria have been power crisis, constant devaluation of Naira, Forex availability coupled with other stringent policies of the government. However, following President Bola Ahmed Tinubu’s inauguration on May 29, 2023, many things changed, including inflation on all fronts. The President, in his inaugural speech, had announced fuel subsidy removal — which has now affected Nigerians of all social strata – and directed the Central Bank of Nigeria (CBN) to begin monetary policy reforms.
Subsequently, the CBN announced immediate changes to operations in the Nigerian Foreign Exchange (FX) market. The apex bank abolished its hitherto multiple exchange rate windows and collapsed them into the business-based Investors and Exporters (I&E) window.
But with the CBN’s devaluation and Foreign exchange unification, the paucity of forex still persists. This, arguably, affected multinationals whose business largely depended on Forex availability and purchasing power of Nigerians greatly eroded by rising inflation.
Recall that in March, Unilever announced the exit of its home care and skin-cleansing from Nigeria. According to the manufacturer of the famous brands such as Omo, Sunlight and Lux; the changes in its business led to the decision to fold up operations in the country.
Barely four months after – precisely July 2023, Nigeria’s second-biggest drug producer and British pharmaceutical giant, GlaxoSmithKline Consumer Nigeria Plc, announced an end to manufacturing operations in Nigeria. While no reason was given for the company’s exit from Nigeria, GSK Plc – with headquarters in the UK – said its prescription medicines and vaccines will be sold in the country through third-party distributors.
Like GSK Plc, this French pharmaceutical multinational, Sanofi, announced its decision to quit Nigeria. The company, in his November announcement, disclosed its resolve to appoint a third-party distributor for its commercial portfolio of medicines from February, 2024.
Similarly, Bolt Food, the online food-ordering arm of ride-hailing company Bolt, offers food delivery in 16 countries and 33 cities globally. But two years after launching Bolt Food in Nigeria, the company declared a difficult decision to discontinue food delivery operations in the country’s market.
The company, in a statement, blamed the decision on the need to “streamline its resources and maximise overall efficiency”.
Like Bolt Food, another food-ordering platform has announced shutting down its food delivery operations, leaving other competitors in the Nigerian market. According to TechPoint, the company – Jumia Food – will now focus on its core physical goods business and the Jumia Pay platform across its 11 countries of operations.
Also, in November, Equinor Nigeria Energy Company (ENEC), a Norwegian energy corporation, — which holds a 53.85 percent ownership in oil mining lease (OML) 128, including a 20.21% stake in the Agbami field, operated by Chevron, has announced the sale of its Nigerian operations. This includes the company’s stake in Agbami oil field and were all sold to a Nigerian-owned firm, Chappal Energies. With this transaction, Equinor’s three-decade presence in the Nigerian energy market comes to an end.
And last Tuesday, the US consumer goods powerhouse Procter & Gamble (P&G), announced its decision to shut down manufacturing in Nigeria. The maker of iconic brands, including Pampers, Gillette, Ariel, Always and Oral-B, which has been operating in the country for 30 years and ran two manufacturing plants in Ibadan, Oyo State and Agbara, Ogun State, disclosed readiness to pivot to import-only activity, describing Nigeria and Argentina markets as problematic for the corporation.
The Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, in his reaction to P&G’s and the mass exodus of multinational companies, said more may leave because the manufacturers operate in a challenging environment.
“Obviously, we received it (P&G exit) with sadness but it is not totally unexpected and more may happen because there is no doubt that we operate in an environment that is challenged,” Ajayi-Kadir said this recently, while appearing on a television programme.
According to him, the exit of multi-nationals should teach the government a lesson on giving priority to local manufacturers, saying “So, what this means is that if you have a challenged local manufacturer, he is not likely to go anywhere”.
