Of Multinationals’ Exodus And Nigeria’s Economy

Nigeria, Africa’s largest economy, has witnessed a disturbing trend in recent years, as  several prominent multinational corporations announced their departure from Nigeria, citing various reasons such as economic hardship, regulatory challenges, insecurity, and difficulty in accessing foreign exchange.  This phenomenon is not without  far-reaching implications for the nation’s economy, which demands careful consideration.  Some of the companies that have left Nigeria include: LafargeHolcim, a Swiss-based cement company, which closed its operations in Nigeria in 2022 due to the challenging economic environment; ExxonMobil, an American oil company, announced its exit from Nigeria’s upstream sector in 2021, citing regulatory uncertainty and security concerns.
Shoprite, a South African retail company, was said to have closed its own operations in Nigeria in 2020 due to the harsh business environment.  General Electric (GE), an American multinational, allegedly shut down its operations in Nigeria in 2019, over difficulties in accessing foreign exchange and the high cost of doing business in the country.  Pfizer, an American pharmaceutical company, which closed its operations in Nigeria in 2018 based its decision on  the challenging business environment, while  Cadbury Nigeria, a British confectionery company,  shut down its operations in Nigeria in 2017 due to the harsh economic conditions. Nokia, a Finnish telecommunications company, also closed its operations in Nigeria in 2016 due to the challenging business environment. The departure of these companies has significant implications for Nigeria’s economy. Firstly, it leads to job losses and a decline in economic activity.
We need not be told that the closure of these companies results in a significant reduction in government’s  revenue, exacerbating the country’s fiscal challenges. The exit of multinationals in this magnitude undermines Nigeria’s attractiveness to foreign investors, a situation that can lead to a decline in foreign direct investment, which is critical to the country’s economic growth and development.  In the light of this disturbing trend, the writer sees a need for urgent reforms to address the challenges facing businesses in Nigeria. The government must act swiftly to address issues such as access to foreign exchange, regulatory uncertainty, and the high cost of doing business in the country. Nigeria’s economic growth has been sluggish in recent years, and the exit of multinationals will only exacerbate the situation. The country’s GDP growth rate has been less than 3 percent in the past few years, and the exit of multinationals will only make it harder for the country to achieve its economic growth targets.
The manufacturing sector has been particularly hard hit by the exit of multinationals. The sector has been struggling due to the challenging business environment, and the exit of companies like LafargeHolcim and Cadbury Nigeria will only make things worse. What about the country’s  trade balance?  As a country which relies heavily on imports, the exit of companies like Shoprite and Nokia will not be funny at all. Of course, the rate of decline in the country’s foreign exchange earnings can only be imagined. Companies like ExxonMobil and GE were significant contributors to Nigeria’s foreign exchange earnings, and their exit will only make it harder for the country to earn foreign exchange.
This no doubt is  a blow to Nigeria’s quest for diversification of  its economy  away from oil.  The exit of companies like LafargeHolcim and Cadbury Nigeria will only make it harder for the country to achieve this goal. Howbeit, the multinationals’  exodus from Nigeria is a wake-up call for the government and stakeholders, for an urgent action is required to address the challenges facing businesses in the country and to create an environment that is conducive for  investment and economic growth. The government must act swiftly to address the issues that led to the exit of multinationals. This includes addressing the challenges of accessing foreign exchange, regulatory uncertainty, and the high cost of doing business in the country.
Nigeria cannot afford to continue to rely on oil exports as its main source of revenue. The country must diversify its economy, and the exit of multinationals is a reminder of the urgent need for economic diversification. The exit of multinationals was a reminder that Nigeria’s economic growth is not guaranteed. The country must work hard to create an environment that is conducive for investment and economic growth.  Thus, the multinationals’ exodus from Nigeria should be seen as a call to action for the government and stakeholders. The time to urgently address the challenges facing businesses in the country with a view to creating an enabling environment for investment and economic growth is now.

Sylvia ThankGod-Amadi