Economic Crisis: Rising joblessness as 16 multinationals exit Nigeria
As Nigeria battles an economic crisis sparked by the government’s twin policies of petrol subsidy removal and unification of FX windows, United Kingdom-based Diageo joined about 15 other multinational companies that have exited the country in the past three years.
Diageo is the latest to announce its departure on Tuesday, June 11, when it said it will sell its 58.02% stake in Guinness Nigeria to Tolaram.
Diageo joins others like Kimberly-Clark, manufacturers of Huggies and Kotex brands of diapers; US-based Procter and Gamble (P&G); GlaxoSmithKline (GSK); Unilever and Sanofi-Aventi Nigeria, who are either exiting completely or reducing 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,” explaining that the inability of the exiting multinationals to access foreign exchange was a major impediment to their operations in the country.
Weighing-in, the Director-General of Nigeria Employers’ Consultative Association, NECA, Adewale Oyerinde, disclosed that at least 15 multinationals have either divested or partially closed operations in the country in the last three years.
Oyerinde, in his assessment, stated: “Over 15 organisations, with a combined value-chain staff strength of over 20,000 employees, have either divested or partially closed operations,” lamenting that this 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”.
Oyerinde added, “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”.
Other sectoral group leaders and analysts maintain that the continuous exit of multinational firms would dampen Nigeria’s $1trn GDP target of President Bola Tinubu’s administration.
The President had, at the 29th Nigeria Economic Summit in Abuja, told business leaders and Nigerians that Nigeria’s economy can grow to $1 trillion by 2026.
Analysts believe the persistent exit of multinational companies from the country is set to impact negatively on this target.
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, on its part, was 1.49 per cent (year-on-year), lower than the same quarter of 2023.
Proofreading by Uchechi Ojo, Sub-editor at Neptune Prime.
