Why FG must stop other multinationals from exiting 

Why FG must stop other multinationals from exiting 

The inclination rate at which multinational companies are ending their manufacturing operations in Nigeria has become alarming to every concerned economic stakeholder and indeed every Nigerian. 

And, if timely strategic interventions are not brought to the fore, as a proactive step in mitigating the impact of the multi-dimensional challenges currently being faced by the businesses, there is no doubt that more of these companies will find their way out. 

It is on record that between January 2023 and December, no fewer than seven multinationals have either left or announced their decision to exit the country. Notably, some of these organisations are- Unilever, GlaxoSmithKline (GSK), Sanofi-Aventi Nigeria, Bolt Food, Jumia Food, Equinor and the latest being Procter & Gamble (P&G). 

Echoing the concerns for the pullout of these strategic companies, the Director General, Lagos Chamber Of Commerce & Industry, Dr Chinyere Almona, urged the Federal Government to engage multinational corporations and the business community and do the needful so as to forestall the exodus of businesses from Nigeria 

“Over the last few months, there has been a consistent increase in exit plans or a reduction in involvement in the Nigerian market by the multinationals, and this trend is worrisome. We have seen the likes of Unilever Nigeria, GlaxoSmithKline, and Guinness Nigeria Plc,” Almona noted. 

Over the years, there have been calls for ease of doing business in Nigeria by stakeholders in various business circles and even by some government officials, but it has become evident that the government has been paying lip service to all policies it issues from time to time without corresponding actions. 

Some of the issues calling for attention over the years and which government has not given enough attention to, include lingering foreign exchange scarcity, poor power supply, port congestion, multiple taxation, insecurity, poor infrastructure, among others 

Commenting further, LCCI helmsman asked the government to engage multinational corporations and the business community to understand their challenges and gather input and feedback on policy decisions to collaboratively develop solutions that will forestall the exodus of businesses from Nigeria. 

He also implores the government to adopt the right policy mix to ensure price stability and create a more flexible and transparent foreign exchange policy to address scarcity issues. 

Without mixing words, the Chief Financial Officer of Procter & Gamble, Andre Schulten, last year, announced P&G plans to transition its Nigerian operations to an import-only model, effectively dissolving its on-ground presence in the country. The company cited challenges in conducting business as a dollar-denominated organization and attributed its strategic decision to the macroeconomic conditions in Nigeria. 

The company has a portfolio valued at $85 billion with Nigeria contributing $50 million in net sales. 

It is common knowledge that most of the challenges which the government itself is in the know of, have taken a huge toll on many businesses in the country. And to stem the tide of mass exodus of companies, the government and perhaps relevant stakeholders must wake up to the reality and do the needful. 

In the wake of GlaxoSmithKline’s announcement to leave the country, the Organised Private Sector has expressed worry that development could trigger a mass exodus of multinational manufacturers from the country. 

In separate statements, LCCI and the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) also urged the Federal Government to speedily address the unfriendly business environment to prevent more businesses fold up. 

“With justification, the chamber is concerned that if the trend persists, the nation’s economic growth potential will not be realised. It is time the government took appropriate action to reverse the saddening trends in the business clime in Africa’s largest market. 

“Factor cost, as an integral element of the profit equation, is viewed with utmost seriousness by business people. In the face of rising costs, business people will likely search for cost-friendlier locations. 

“The chamber is inclined to suggest the government take a holistic view/review of the business environment and take steps to make the nation’s business clime more competitive for growth,” they stressed. 

While some observers may say that measures have been put in place by the government to assuage the plight of these economic operators, it can also be argued that those measure both fall short of the desired results and are mostly adhoc in nature. 

For example, the commitment to power projects, including the Siemens Energy initiative and efforts to enhance the reliability of transmission lines, is a positive step towards addressing the critical issue of electricity supply, which aligns with the business community’s aspirations for a robust and diversified economy. However, there is an urgent need to address the structure of the power sector. 

The Government needs to consider bringing private sector investment into the transmission segment of the power sector. 

This would ensure adequate technical and financial capacity for a well-functioning sector to power economic growth. 

In LCCI’s view, there is need for the government to provide more detailed plans and strategies to tackle all the acknowledged challenges, foreign exchange scarcity, poor power supply, port congestion, multiple taxation, insecurity, poor infrastructure and inflation. 

If the government’s attention to these critical issues continues to be in form of rhetoric, then, 2024 may witness not only the foreign companies ‘escaping’ out of the country, but, the indigenous business operators may also begin to seek for clement business environment for their survival or they may contemplate closing down their operations. 

Knowing the enormous implications of any company shutting down or pulling out of the country at these austere times, the government at all levels and relevant stakeholders cannot delay any further to save the situation before it is too late. 

Last month, in acknowledgement of the economic roles small and large businesses play in the any community, the Deputy President of the Senate, Senator Barau Jibrin, reportedly, in a frantic effort, set machinery in place to halt the moves by Shoprite, one of Nigeria’s prominent supermarket chains, to close its only branch in Kano State. 

The company’s decision to exit the Centre of Commerce in January, blaming it on a ‘’ challenging economic situation.’’ 

According to the Senator’s Aide, “The Office of the Deputy President of the Senate has set machinery in place to halt the exit of Shoprite from Kano State. He will meet with the management of the company this week where the issue will be discussed and hopefully resolved. At a time when we are scouting for investors, we will not fold our hands and allow them to leave,” he said. 

While many promises are from time to time being marshaled, it is believed that a transparent and inclusive approach to governance will immensely build and boost public confidence and achieve sustainable economic growth. (Independent)