Despite having the largest economy in Africa and a population of over 200 million, which holds significant potential for wealth generation, Nigeria is witnessing a departure of multinational corporations due to the high cost of conducting business and a severe lack of essential infrastructure, particularly in the realm of electricity,Daily Trust reports.
Experts have pointed out that this issue predates President Bola Tinubu’s administration, but it is crucial to address it now, especially as a new government is being formed. They emphasize the need for swift action to rectify the situation.
Multinational companies are departing Nigeria due to various challenges such as skyrocketing inflation, volatile foreign exchange rates, rising interest rates, a chronic electricity crisis, and other factors that have increased operational costs and affected business profitability.
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Companies like Procter & Gamble, Surest Foam Limited, Mufex, Framan Industries, Moak Industries, Deli Foods, Stone Industries, MZM Continental, and Nipol Industries have either completely or partially shut down in recent years.
Nevertheless, some experts offer an alternative perspective on why foreign companies are leaving Nigeria. They suggest that these decisions can also stem from internal company needs or global labor and technology trends affecting specific sectors. External factors such as sudden changes like the pandemic or economic downturns may also play a role. Moreover, while some companies exit, others might be entering, with sectors like fintech and the broader digital economy expanding in the country.
Since the Tinubu administration took office, there have been discussions about efforts to revitalize the economy, attract Foreign Direct Investment (FDI), and enhance the competitiveness of local industries. Initiatives like the launch of Nigeria’s first trade and investment policies aim to stimulate domestic and foreign trade and promote sustainable development.
In July, the Special Adviser to the President on Revenue, Zacch Adedeji, announced plans to streamline taxes from 52 to 10 to enhance efficiency and accountability.
However, the recent exit of GlaxoSmithKline (GSK), a British multinational pharmaceutical and biotechnology company, after 51 years of operations in Nigeria has raised concerns that it might trigger further departures of multinational companies. Various expert bodies, including the Nigerian Association of Chambers of Commerce, Industries, Mines, and Agriculture (NACCIMA), the Lagos Chamber of Commerce and Industry (LCCI), and the Nigeria Employers Consultative Association (NECA), attribute the exodus to unfavorable government policies.
They emphasize the need for the government to review short-term economic policies, create a conducive business environment, offer access to affordable financing, invest in infrastructure and power supply, provide tax incentives, and streamline bureaucratic processes to encourage business growth. Collaboration between the government and the private sector is also encouraged to stimulate economic growth and job creation.
Additionally, indigenous companies are facing challenges in the harsh operating climate, leading to closures and significant job losses, exacerbating Nigeria’s high unemployment rate. Industries such as textiles and poultry are particularly affected.
Efforts to address the collapse of businesses in Nigeria remain a critical concern for both foreign and domestic enterprises, yet specific measures beyond tax reforms and palliatives are needed to safeguard economic stability and competitiveness.
