The Multinational Exodus: Corporate Giants Exiting Nigeria
Nigeria, the largest economy in Africa with a population of over 200 million, is currently experiencing a significant exodus of multinational companies. Since January 2023, a total of seven multinationals have either withdrawn from the country or announced their plans to do so by December.
Some of these companies have been operating in Nigeria for decades, while others have ceased operations just three years after establishing a presence in the country. The challenges faced by local and multinational manufacturers in Nigeria, prior to 2023, included power crises, constant devaluation of the Naira, and Forex availability, compounded by stringent government policies.
However, significant changes occurred following the inauguration of President Bola Ahmed Tinubu on May 29, 2023. This was marked by inflation at all levels, primarily resulting from the removal of fuel subsidies, affecting Nigerians across all social strata. Additionally, the President directed the Central Bank of Nigeria (CBN) to initiate monetary policy reforms.
As a result, the CBN made immediate changes to operations in the Nigerian Foreign Exchange (FX) market. The central bank collapsed its multiple exchange rate windows into the business-based Investors and Exporters (I&E) window. Nonetheless, the scarcity of Forex persists, significantly affecting the operations of multinational companies that rely heavily on Forex availability and purchasing power eroded by rising inflation.
One such company announced its exit even before May. Despite the President’s efforts to highlight the country’s economic potential, the departure or divestment of multinational companies in Nigeria sends mixed signals to potential investors.
Below are the multinational companies exiting Nigeria in 2023:
Unilever
Unilever announced in March its decision to pull out of Nigeria, citing changes in its business as the reason for ceasing home care and skin cleansing operations in the country.
GSK Plc
In July 2023, GlaxoSmithKline Consumer Nigeria Plc, Nigeria’s second-biggest drug producer and a British pharmaceutical giant, announced the end of its manufacturing operations in the country. The company stated that its prescription medicines and vaccines would be distributed in Nigeria through third-party distributors.
Sanofi-Aventi Nigeria
French pharmaceutical multinational Sanofi disclosed its decision to leave Nigeria in November, appointing a third-party distributor for its commercial portfolio of medicines from February 2024.
Bolt Food
Bolt Food, an online food-ordering platform, decided to discontinue its food delivery operations in the Nigerian market after two years, citing the need to streamline resources and maximize overall efficiency.
Jumia Food
Jumia Food also announced the shutdown of its food delivery operations to focus on its core physical goods business and the Jumia Pay platform across its 11 countries of operations.
Equinor
Norwegian energy corporation Equinor Nigeria Energy Company (ENEC), which has been operating in the Nigerian energy market for three decades, announced the sale of its Nigerian operations, marking the end of its presence in the country.
Procter & Gamble (P&G)
P&G, a major US consumer goods company operating in Nigeria for 30 years, announced its decision to shut down manufacturing in the country. The company cited the challenging nature of the Nigerian and Argentine markets for its import-only activity.
In response to the mass exodus of multinational companies, Segun Ajayi-Kadir, the director-general of the Manufacturers Association of Nigeria (MAN), stated that more companies may leave due to the challenging business environment. He also emphasized the need for the government to prioritize local manufacturers.
The departure of these multinational companies from Nigeria raises concerns about the business environment in the country. It sends the message that critical reforms and support are required to retain and attract investments to sustain a flourishing economy.
