FG in talks with multinationals to curb exits

Doris Uzoka-Anite, minister of industry, trade and investment, has said the federal government is in talks with multinational companies, including those that have left the country, to find solutions to their challenges.

Some multinational companies have cut back their operations in Nigeria, while some have exited the country amid mounting economic headwinds.

In the last 10 months, at least five multinationals have wound down operations in Africa’s largest economy, the latest being Procter & Gamble, an Ohio-based consumer goods giant, which announced that it will dissolve all on-ground operations and stop producing its care and hygiene products in the country.

Uzoka-Anite, while speaking during a panel session at the launch of the World Bank Nigeria Development Update report on Wednesday, said the government was concerned about the exits and working to bring back those that have left and encourage the ones still present, including local investors.

She said: “For those companies that are exiting, we’ve been reaching out to them. For example, P&G is recent; we’ve reached out to them a couple of times and proposed some exit strategies, to smoothen their exit or reverse exit strategy and have them retained.

“That discussion is still ongoing and we intend to do that with multiple other agencies. And going forward in the new year, we will be engaging more of the international business communities that are present in Nigeria to ascertain their pain points and see how we can accomodate them as a government.”

She added: “We know the difficult challenging environment for businesses in Nigeria and working with the Presidential Enabling Business Environment Council, trying to also see how we can facilitate more ease of doing businesses for these companies.

“It’s not just the foreign ones that are exiting, even the local ones, some of them are closing down. But we just have to continue to dialogue with them, bringing them up to speak to what governments are doing.”

Andre Schuten, P&G’s chief financial officer, had attributed the company’s exit to tough macroeconomic conditions, particularly the currency weakness.

“Nigeria is very difficult for us as a US dollar-denominated company to create value” in, Schuten reportedly said at Morgan Stanley’s Global Consumer and Retail Conference, an investor event in New York.

“The other reality that arises in some of these markets is that it gets increasingly difficult to operate and create US dollar value. So, when you think about places like Nigeria and Argentina, it is difficult for us to operate because of the macroeconomic environment,” he said. “We’ve announced that we will turn Nigeria into an import-only market, effectively dissolving our footprint on the ground in Nigeria and reverting to an import-only model.”

Read also: How Nigeria can reverse multinationals’ ‘japa’

British multinationals GSK and Unilever have also announced changes to their Nigeria operations this year.

In September, PZ Cussons, another British group, cited foreign exchange challenges as reason to delist from the Nigerian stock market.

Nigeria’s FX backlog which had reached over $6 billion, remains a major business constraint in a country that is seeking investments to revive its economy.

Though the CBN announced last month that it had begun to clear the backlog, the Economist Intelligence Unit raised fears that the apex bank may not be able to completely handle such obligations, looking at the level of reserves, which now stand at about $32 billion.