An Exodus of Foreign Companies from Nigeria: A Concerning Trend

The recent exodus of several multinational manufacturing companies from Nigeria is a matter of great concern. Companies such as Unilever, GlaxoSmithKline, Sanofi, Procter and Gamble, and Bolt are either discontinuing operations or reorganising to function as importers. In addition, significant players in the oil industry, including Shell, ExxonMobil, and ENI, have divested their interests to domestic investors and exited the country.

The departure of these well-established companies is a severe blow to Nigeria’s economy, prompting serious questions about the country’s appeal to foreign investors. This pattern is not novel, with previous instances involving Michelin and Dunlop exiting the nation due to challenges in the rubber raw materials sector.

The primary reasons cited for these departures include heightened insecurity in the Niger Delta region and the government’s failure to meet its obligations under joint venture agreements in the oil industry. Furthermore, the business climate in Nigeria is deemed inhospitable due to high foreign exchange costs, energy expenses, multiple taxation, a flawed criminal justice system, and widespread insecurity.

The ramifications of this exodus are extensive. Unemployment rates are likely to increase, and the cost of essential commodities, including medicine, may become unaffordable for many Nigerians. This situation threatens to reverse the progress made in the manufacturing sector and could lead to a return to shortages reminiscent of the 1980s.

In view of these developments, it is imperative for the government to address the underlying issues and create an environment conducive to manufacturing and investment. This includes empowering indigenous manufacturers and addressing the challenges that have led to the departure of multinational companies. The restoration of Nigeria as an attractive destination for manufacturing and investment should be a top priority for the government.

As President Bola Tinubu seeks new investors for the economy, it is essential to recognise the importance of retaining existing businesses while attracting new ones. The departure of multinational companies signals a need for comprehensive reform and a concerted effort to address the longstanding issues that have contributed to this concerning trend.