More foreign, multinational companies quit Nigeria, citing harsh business environment as their reasons
Obi, Manufacturers’ Association of Nigeria, MAN lament the ugly trend
House of Reps set up committee to look into the situation, halt the trend
This is not the best for of time for multinational companies in Nigeria as more and more of such companies have continued to exit the country.
WITHIN NIGERIA gathered that Aarti Steel Nigeria has reportedly shut down operations in the country, citing economic pressure as the reason for its decision.
Findings showed that the $30m Indian company which produces roofing sheets has been in business in Nigeria for than a decade, establishing itself as a reliable business partner for numerous customers in the country and even beyond.
Aarti which has been into roofing sheet production for many years with considerable market foot prints may finally be saying good bye to Nigeria, according to reliable source.
The Ota Ogun state-based Steel plant has allegedly not been operating smoothly for almost a year with intermittent production which made it impossible for the company to meet the funding requirements for the continuation of its operations.
President Ahmed Tinubu
A source hinted that the impact of severe indebtedness due to forex exchange losses, adverse economic policies and other factors which depressed the local pricing mechanisms forced the company to sell at a price lesser than its cost of production. These factors were said to have been primarily responsible for the shut-down of the plant.
The source further disclosed that two other major steel companies based in Nigeria and a couple of Indian steel companies have shown interest to buy the closed plant and continue the company’s operation in order to save thousands of direct and indirect jobs associated with its value chain.
Companies that have exited Nigeria in the last one year
In any case, findings by WITHIN NIGERIA revealed that in the past year, at least seven multinational corporations have pulled out of the country, with most of the organisations citing unfavourable business environments caused by the unavailability of foreign exchange.
Further checks showed that most of these companies are either pharmaceutical, household or food companies, as the dust settles, the departures of these companies have led to far-reaching implications for Nigeria’s economy, workers, and future investments. Again, prices of their products have continued skyrocket unlike when they were in the country.
GlaxoSmithKline
In August 2023 after 51 years of operation in the country, GlaxoSmithKline announced its exit from Nigeria. GlaxoSmithKline Consumer Nigeria Plc was incorporated in Nigeria on June 23, 1971, and commenced business on July 1, 1972, under the name Beecham Limited.
The firm which is a healthcare company that researches, develops, and manufactures pharmaceutical medicines, vaccines, and consumer healthcare products such as Panadol, Andrews liver salt, Macleans, Ampiclox, and Sensodyne, amongst others.
The pharmaceutical company attributed its departure from Nigeria to the government’s foreign exchange unification policies, which have led to persistent currency issues and dollar scarcity, severely impacting its manufacturing operations and production capabilities.
The report also noted that as a result of the exit, Nigeria would now have to import and pay more for the prescriptible and off-the-counter drugs made by the company.
Though the company has exited from Nigeria months ago, the prices its products which are still being sold in the country have tripled.
Equinor
Few months after the exit of Glaxosmithkline, on November 29, 2023, another giant company, this around, an energy company, Equinor announced its departure from Nigeria after over 30 years of operations, while revealing that it had sold its business interests, including its stake in the Agbami oil field, to Chappal Energies, a Nigerian-owned company.
The Norwegian oil firm will divest its subsidiary, Equinor Nigeria Energy Company (ENEC), which holds a majority stake in oil mining lease (OML) 128, including a significant interest in the Agbami field, operated by Chevron.
While the company didn’t disclose its reasons for leaving, it stated that the transaction’s completion is contingent on meeting certain conditions, including regulatory and contractual approvals from both parties.
Sanofi
Before Equinor scenario, Sanofi-Aventis Nigeria Limited, a French pharmaceutical company, announced on November 7, 2023, that it would adopt a third-party distribution model for its products in Nigeria, effective February 2024.
Mr. Peter Obi: expresses concern over the trend
The company, our findings showed is a major supplier of vaccines in Nigeria, cited Nigeria’s economic challenges, particularly the foreign exchange crisis, as the main reason for this decision.
However, Sanofi aims to increase efficiency and sustainably reach patients and the medical community through this new model, which involves partnering with a single strong distributor with extensive geographic coverage.
On February 2, 2024, CFAO Healthcare, a subsidiary of the French conglomerate CFAO Group, announced its expansion with Sanofi, strengthening its strategic partnership.
Procter & Gamble
As the 2023 drew to close, on December 5, 2023, Procter & Gamble (P&G) announced its decision to cease operations in Nigeria after three decades, transitioning to an import-only model.
Like other exited multinational companies, this was driven by Nigeria’s challenging business environment, largely due to dollar-denominated operations and unfavourable macroeconomic conditions.
The P&G’s chief financial officer, Andre Schulten, mentioned that operating in certain markets like Nigeria and Argentina had become increasingly challenging due to these macroeconomic factors.
A few days after the announcement, Segun Ajayi-Kadir, the director-general of the Manufacturers Association of Nigeria (MAN), expressed concerns about P&G’s departure, warning that other manufacturers might also consider exiting the country.
Bolt Food and Jumia Food
Also in December 2023, Bolt Food decided to take a bow from Nigeria after operating for two years in the country. The company cited the need to streamline resources and enhance overall efficiency as the reason for its departure.
Our reporter gathered that Bolt Food was launched in October 2021 by the ride-hailing company to compete with rivals like Jumia Food and Gokada, making food access easier in Lagos.
Similarly, Jumia Food also exited the Nigerian market in December 2023. Initially launched as Hellofood in 2012, it rebranded in 2019 under the Jumia Group.
Jumia Food was one of the pioneers of online food delivery in Nigeria and had the widest geographic coverage before its departure.
Jumia also discontinued its services in other countries, including Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria. Jumia’s CEO, Francis Dufay, stated that the company would now focus on its core physical goods business and payment platform.
Microsoft
The year 2024 brought another heavy challenges for both indigenous and multinational companies in the country.
However, on May 8, 2024, Microsoft announced its decision to close its African Development Centre (ADC) in Ikoyi, Lagos.
Although the company did not provide a specific reason for this closure, it emphasized its continued commitment to operations in Nigeria and its focus on investing in strategic growth areas.
Microsoft launched the innovation centre in 2019 to develop technology solutions from Africa to tackle both regional and global challenges.
Hon. Umoh; sponsored the motion
Impressed by the initiative’s success, the company established $100 million African Development Centres in Nigeria and Kenya in 2022. Despite the closure of the Nigerian centre, the Kenyan centre will remain operational.
On June 14, 2023, the Central Bank of Nigeria instructed Deposit Money Banks to eliminate the rate cap on the naira at the Investors and Exporters’ (I&E) Window of the foreign exchange market, enabling the national currency to float freely against the dollar and other global currencies.
The floating naira and the resulting dollar fluctuations prompted these companies to exit the market. This has significantly impacted the prices of goods and services, particularly pharmaceutical products. For instance, as of November 2023, the average cost of anti-malaria medication is N200, depending on the brand and its effectiveness.
According to World Health Organisation (WHO) data, Nigeria remains the world’s malaria capital, with 97% of its population at risk of the disease.
Divestment of Oil companies
Another energy giant, Total Energies is said to have joined in the league of companies that have decided to bid farewell from Nigeria.
Though the company has not entirely exited Nigeria, Total Energies, Shell & other International Oil Companies-IOCs are divesting their assets, away from Nigeria with billions of investments going to other African countries with better business environment.
For instance, Total Energies is increasing its stakes in Angola and the Congo.
PZ Cussons
PZ Cussons Plc, in April 2024, said it has commenced a strategic review of its business in Africa, with a consideration of exiting the continent, partly driven by economic challenges in Nigeria such as naira devaluation and inflation, which has significantly impacted the company’s sales and operations, resulting in a 48 percent sales plunge.
Jonathan Myers, CEO of PZ Cussons, emphasised the importance of looking towards the future while respecting the company’s past, indicating that the review’s outcomes could include changes in ownership.
Myers added, “The macro-economic challenges and complexities associated with operating in Nigeria are significant and there is much more to do to unlock the full potential of the business.”
“As such, we have undertaken a strategic review of our brands and geographies and have embarked on plans to transform our portfolio, refocusing on where the business can be most competitive.”
PZ further stated: “In addition to the challenges of the significant exposure to Nigeria, the group is too complex for its size, with financial and human resources spread too thinly to generate consistent returns.”
“This means its competitive advantages have been constrained in comparison to those of both larger multinational companies and some focused, smaller ones,” he further said in a statement that confirmed their exit.
Kimberly-Clark
Also, the American multinational and makers of “Huggies”-Kimberly-Clark has also announced it has made the difficult decision to exit its business in Nigeria after almost 15 years, due to recently refocused company strategic priorities globally as well as economic developments in the country.
Kimberly-Clark will close its manufacturing facility and commercial office in Lagos and will no longer manufacture, market, or sell its Huggies and Kotex products in the country.
Nigerian Lawmakers set to investigate the situation
As the exit continues to fester and take huge financial and investment toll on Nigeria, on February 20, 2024 Nigerian lawmakers took a bold step and resolved to investigate the departure of some of these multinational companies from the country.
WITHIN NIGERIA gathered that the resolution was reached by the House of Representatives following the adoption of a motion moved by Patrick Umoh (APC, Akwa Ibom) and two other legislators during Tuesday’s plenary session.
Our reporter equally gathered that the co-sponsors are Lukman Mudashiru and Paul Ekpo.
Moving the motion on the need for intervention to halt the exit, Mr. Umoh listed about a dozen companies that have left the country or ceased production due to the harsh economic environment.
Some of the companies listed by the lawmaker include Surest Foam Limited, Mufex, Framan Industries, MZM Continental, Nipol Industries, Moak Industries, Stone Industries, Procter and Gamble, Sanofi-Aventis, and Equinor.
He added that Bolt Food discontinued food delivery due to economic challenges, while Jubilee Syringe Manufacturing also declared temporary redundancy due to unforeseen business challenges.
Mr Umoh said the mass exit of companies hinders economic growth potential, leads to job losses, increased poverty, decreased government revenue, and diminished investor confidence in the Nigerian market.
“Multinational companies are exiting or closing operations in Nigeria due to economic uncertainties, challenging business environments, lack of electricity, constant naira devaluation, high taxes, insecurity, poor infrastructure, port congestion, and stringent government policies,” he said.
Consequently, the House mandated its committees on Industry, Labour, Employment, and Productivity to investigate the closure of local companies and the departure of multinational companies from Nigeria.
The committees were also asked to identify the factors hindering the ease of doing business in Nigeria.
The House also urged the federal government and other relevant agencies and ministries to implement clearly defined measures to address the challenges confronting the nation, particularly in the manufacturing sector, and create conducive environment for businesses to thrive.
However, WITHIN NIGERIA investigations showed that since the committee was set up, no visible action has been taken to halt the ugly.
Till this moment, the committee has not produced any report as to why such companies have continued to exit the shores of Nigeria with a view to finding lasting solutions to the situation.
Obi reacts to the ugly trend
Reacting to the ugly development, former Labour Party, LP, presidential candidate, Peter Obi, on Monday said Nigeria has lost N95 trillion in the past five years to the exodus of multinational companies from the country.
Obi lamented that companies like GlaxoSmithKline, Equinor, Sanofi-Aventis, Bolt Food, Procter & Gamble, Jumia Food, PZ Cussons, Kimberly-Clark, Diageo and others have exited Nigeria, while citing consistent reasons.
He urged the government to prioritize security, stabilize policies, and reduce energy costs as a way for multinational companies to strive in Nigeria.
Posting on verified X account, Obi called for a culture of transparency, accountability, and good governance.
In his words, “I am compelled to address the alarming exodus of multinational companies from Nigeria, which has cost our nation a staggering N95 trillion in the past five years. According to The New Telegraph, in the last year alone, over ten multinational giants such as GlaxoSmithKline, Equinor, Sanofi-Aventis, Bolt Food, Procter & Gamble, Jumia Food, PZ Cussons, and Kimberly-Clark, Diageo and others, have exited Nigeria, citing eerily consistent reasons.”
Obi blamed the exit of these multinational companies on governance and leadership.
He urged the government to create a business friendly environment for multinational companies to grow.
The former Anambra state governor further called on the Federal Government to transform Nigeria into a nation conducive to business, attractive to investment.
He pointed out that Nigeria can become a beacon of hope and progress in Africa and the world.
MAN laments the situation
President of the Manufacturers Association of Nigeria (MAN), Francis Meshioye has decried the continuous exit of foreign multinationals from the country, a move which has been predicted to lead to over 6,000 job losses.
According to MAN, the situation is very much worrisome, considering the huge economic implications it portends.
MAN, however, urged the Federal government to expedite actions towards ending the ugly trend.
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