The United Kingdom-based Diageo has exited Nigeria, joining about 15 other multinational companies that have left in the past three years.
The exit of the multinationals is coming on the heels of the economic crisis that was sparked by the twin policies of petrol subsidy removal and unification of FX windows, introduced at beginning of President Bola Tinubu government.
Diageo announced its departure on June 11 by way of selling its 58.02% stake in Guinness Nigeria to Tolaram.
Among others multinationals that have exited Nigeria are Kimberly-Clark, manufacturers of Huggies and Kotex brands of diapers; US-based Procter and Gamble (P&G); GlaxoSmithKline (GSK); Unilever and Sanofi-Aventi Nigeria. They either exited completely or reduced their exposure in a country facing its worst cost-of-living crisis in decades.
Unilever Nigeria announced its exit from the home care and skin cleansing markets in Nigeria in November 2023, saying it did so “to find a more sustainable and profitable business model.”
Procter & Gamble was the last to announce its exit from the country the same year.
Similar reasons given by these and other companies include high energy costs, currency depreciation, insecurity etc.
The Federal Government itself acknowledged these challenges in an interview granted by Minister of Finance, Wale Edun on Channels Television’s Sunday Politics programme, where he said “lack of a liquid foreign exchange market was the major reason why some multinational companies exited Nigeria.”
According to him, the inability of the exiting multinationals to access foreign exchange was a major impediment to their operations in the country.
This was even as the Director-General of Nigeria Employers’ Consultative Association, (NECA), Adewale Oyerinde, confirmed, in his assessment, that “Over 15 organisations, with a combined value-chain staff strength of over 20,000 employees, have either divested or partially closed operations.”
He lamented that the development has dire consequences not only for organised businesses but also for labour, government revenue and the households; massive job losses across sectors, which would continue to create insecurity challenges.
“When NECA examined the exit of prominent companies like GSK, Sanofi, Procter & Gamble, Nampak and others, who had been doing business in Nigeria for decades and were huge employers of labour, it was worried about the ripple effect on the broader business ecosystem.
“Within the value chain, numerous enterprises serve as suppliers to these major corporations, and their sustainability is significantly compromised when the primary businesses they cater to face extinction.
“The survival prospects of these secondary businesses are at stake, and their employees are also at risk, as the departure of the main clients could lead to their demise. The crisis within the value chain deserves more attention than it currently receives.”
Analysts believe the persistent exit of multinational companies from the country would impact negatively on the economy.
Data from the National Bureau of Statistics (NBS) revealed that the performance of the GDP in the first quarter of 2024 was driven mainly by the services sector, which recorded a growth of 4.32 per cent and contributed 58.04 per cent to the aggregate GDP, whereas the nominal GDP growth of the manufacturing sector in the first quarter of 2024 was recorded at 8.21 per cent (year-on-year), 9.64 per cent points lower than the figure recorded in the corresponding period of 2023.
Real GDP growth in the manufacturing sector in the first quarter of 2024 was 1.49 per cent (year-on-year), lower than the same quarter of 2023.
President of the Manufacturers Association of Nigeria (MAN), Otunba Francis Meshioye asked the government to frontally address insecurity, improve electricity supply, promote fiscal sustainability and ensure policy consistency.
“Among other priorities, the fiscal authority must also lend supportive measures by adequately incentivising the manufacturing sector and other productive sectors.
“This is very important to boost non-oil export earnings in addition to the increase in oil export proceeds occasioned by increased oil production, rising global oil prices and the coming on stream of the Dangote Refinery.”
