Nigeria’s Economy Loses N94tn in Output Due to Multinational Exodus

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The departure of multinational companies from Nigeria has resulted in a staggering N94 trillion loss in output over the past five years, according to Dr. Vincent Nwani, an economist and former Director of Research and Advocacy at the Lagos Chamber of Commerce and Industry.

Several multinationals have either scaled down operations, transferred ownership, or sold their stakes in Nigeria. The most recent example is the sale of Diageo’s 58.02 percent shareholding in Guinness Nigeria to Tolaram Group on June 11, 2024.

Dr. Nwani explained to The PUNCH that he calculated the economic impact by evaluating the valuation and value addition of these multinationals, considering factors such as employment, salaries, and turnover. He has been monitoring Nigeria’s economic data for two decades and included a comprehensive list of companies in his analysis to arrive at the final figure.

In 2020 alone, over 10 companies ceased operations in Nigeria, including Standard Biscuits Nigeria Ltd, NASCO Fiber Product Ltd, Union Trading Company Nigeria PLC, and Deli Foods Nigeria Ltd. In 2021, more than 20 companies exited, such as Tower Aluminium Nigeria PLC, Framan Industries Ltd, Stone Industries Ltd, Mufex Nigeria Company Ltd, and Surest Foam Ltd. The trend continued in 2022, with over 15 known brands leaving, including Universal Rubber Company Ltd, Mother’s Pride Ventures Ltd, Errand Products Nigeria Ltd, and Gorgeous Metal Makers Ltd.

The exodus persisted in 2023, with more than 10 major companies departing, notably Unilever Nigeria PLC, Procter & Gamble Nigeria, GlaxoSmithKline Consumer Nigeria Ltd, ShopRite Nigeria, Sanofi-Aventis Nigeria Ltd, Equinox Nigeria, and Bolt Food & Jumia Food Nigeria. In the first half of 2024, five major companies, including Microsoft Nigeria, Total Energies Nigeria, PZ Cussons Nigeria PLC, Kimberly-Clark Nigeria, and Diageo PLC, also left.

Dr. Nwani highlighted that the most significant contributor to Nigeria’s N94 trillion loss was Microsoft Corporation’s closure of its Africa Development Centre in Lagos on May 8, 2024. This closure, followed by Microsoft’s announcement of a proposed $100 billion investment in a Kenyan data center, exemplified the magnitude of the economic impact.

From 2020 to 2022, the cumulative lost output and potential investment amounted to N24 trillion. From 2023 to the first half of 2024, larger multinational exits, such as Microsoft’s departure, accounted for over 50 percent of the total figure.

Dr. Nwani identified the primary reasons for the exodus as the foreign exchange crisis, worsening security conditions, and the power supply crisis, which led to exorbitant energy costs. He warned that if these issues persist, at least 10 more notable multinationals could leave Nigeria by the end of the year.

He emphasized the need for the government to address these critical issues to prevent further economic decline. Similarly, Professor Olusegun Ajibola of Babcock University noted that the exit of multinationals was largely due to the depreciation of the naira, which eroded the value of foreign investments. He explained that this often leads multinationals to sell their stakes rather than continue to operate in a challenging economic environment.

Despite the departures, Ajibola pointed out that new companies are still entering Nigeria, highlighting the country’s potential as an attractive market for international investors. He acknowledged that while Nigeria has significant challenges, it also offers opportunities for those willing to navigate its complex landscape.

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