As Nigeria battles an economic crisis exacerbated by the government’s policies on petrol subsidy removal and FX window unification, several multinational companies have exited the country. Recently, UK-based Diageo announced its departure, selling its 58.02% stake in Guinness Nigeria to Tolaram. This move adds Diageo to the list of companies like Kimberly-Clark, Procter and Gamble, GlaxoSmithKline, Unilever, and Sanofi-Aventis Nigeria that have either exited or reduced their presence in Nigeria due to high energy costs, currency depreciation, and insecurity.
The Federal Government acknowledged these challenges, with Finance Minister Wale Edun attributing the exodus to a lack of a liquid foreign exchange market, which hindered the multinationals’ operations. The Nigeria Employers’ Consultative Association (NECA) reported that at least 15 multinationals have divested or partially closed operations in the past three years, affecting over 20,000 employees and impacting organized businesses, government revenue, and households.
NECA Director-General Adewale Oyerinde highlighted the ripple effects on the broader business ecosystem, as many enterprises that serve these multinationals face sustainability issues. He emphasized the need for attention to the value chain crisis caused by these exits.
Other sector leaders and analysts warn that this trend could impede Nigeria’s $1 trillion GDP target set by President Bola Tinubu’s administration. Despite a growth of 4.32% in the services sector, the manufacturing sector’s nominal GDP growth was 8.21% in Q1 2024, down from the previous year, with real GDP growth at 1.49%.
President of the Manufacturers Association of Nigeria (MAN), Otunba Francis Meshioye, called for the government to address insecurity, improve electricity supply, promote fiscal sustainability, and ensure policy consistency. MAN also recommended measures to incentivize the manufacturing sector and boost non-oil export earnings.
The Lagos Chamber of Commerce and Industry (LCCI) echoed these concerns, urging the government to stabilize the foreign exchange market, improve infrastructure, and engage with multinationals to develop solutions to prevent further exits.
Femi Egbesola, President of the Association of Small Business Owners of Nigeria (ASBON), stressed the importance of retaining real investors for economic growth. He noted that the departure of multinationals, without a corresponding increase in indigenous investments, hinders Nigeria’s economic progress.
While the Tinubu administration has announced efforts to revamp the economy and encourage Foreign Direct Investment (FDI), it remains to be seen if these measures will be sufficient to stem the flow of multinational exits and stabilize Nigeria’s economic landscape.