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As the levels of hardship, unemployment, inflation and hunger keep increasing in the country, most Nigerians are afraid that this degrading fluctuating mode of status will give a devastating punching out beat of downgrading economic instability.

In the second half of 2023 alone, approximately 5 multinational companies have announced plans to exit Nigeria, a situation that could reduce the foreign investment inflow into the country. Many foreign and local manufacturing companies have halted their operation in Nigeria over the same issue of worsening macroeconomic challenges. Citing Foreign Exchange scarcity, poor power supply, port congestion, multiple taxation, insecurity and scarcity of raw materials among others, have taken a toll on many businesses in the country. With the removal of fuel subsidy in which the price of fuel jumped from 200 naira to over 600 naira, with such high cost of energy, manufacturers who rely primarily on fuel and gasoline powered machineries to produce, will definitely find it almost impossible to sustain their business.

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According to data from the National Bureau of statistics (NBS), investments declined by 33% in the second quarter of 2023 and another report from the United Nations Conference on Trade and Development showed that the Foreign Direct Investment inflow into the country turned negative (-$187millon) last year for the first time in at last 33 years.

Over the last few months this worrisome trend where we have seen manufacturing companies shut down and leave the country has taken hold of mainstream news and a fast response to this approach is much needed. In August GlaxoSmithKline Consumer Nigeria PLC, a healthcare company announced it would exit the country after 51 years of operation. They plan to cease commercialized manufacturing of its prescription medicine and vaccines in Nigeria through the GSK local operating companies and transition to a third-party distribution mode for its pharmaceutical products. In September, PZ Cussons Nigeria, a consumer goods company announced plan to delist from the Nigerian Stock Exchange. Again in October, Guinness Nigeria, an alcoholic beverage maker said it will stop the importation and distribution of certain type of its premium drink effective from April 2024. Sanofi, a French pharmaceutical company said that it has begun to plot its exit from Nigeria and that it had appointed a third party distributor to solely handle its commercial portfolio of medicine from February 2024. Then in November, Proctor and Gamble (P&G) which has been operating in the country for more than 30 years said it will transmit its Nigerian operations to an import only model. Although the famous Unilever Nigeria, a consumer goods company is still operating in Nigeria, the company has stopped the production of its legendary Omo, Sunlight and Lux home and skincare brands. 

Over the last few months there has been a consistent increase in the exit plan or a reduction of involvement in the Nigeria market by multinationals. Segun Ajayi Kadir, Director General of Manufacturers Association of Nigeria (MAN) said on Channels TV that they might be more exits in the manufacturing sector until the Federal Government implements a well-defined measure to address the issues facing the nation’s manufacturers. He said “We obviously received the P&G exit with sadness but it is not totally unexpected and more may happen because there is no doubt that we operate in an environment that is challenged”.

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The new administration under the leadership of President Bola Tinubu made headlines when it decided to remove the subsidy on petrol and the foreign exchange reform. The reform led to a rising inflationary pressure which weakened the purchasing power of the common man and business alike and most businesses are grappling with higher operating costs. This is coming as the World Bank latest development update report shows that due to the sluggish growth and rising inflation in Africa’s biggest economy, an additional 24 million Nigerians have been thrown into poverty within 5 years. Increased poverty from 40% in 2018 to 46% in 2023 was shown. According to the international organization, it said the number of poor people rose from 79 million in 2018 to 104 million in 2023 with urban poverty more exposed to inflation, increasing from 13 to 20 million people while the rural area increased from 67 million to 84 million.

As it stands, no one actually knows the extent as to which the downfall and the apparent downgrade in the economy has hit the common man. We can only assume and hope the government comes up with a sustainable policy in the upcoming months. With the huge outflux of multinational companies which will definitely increase the unemployment rate in the country and with the foreign exchange reform which has already impacted the countries inflationary pressure, where you have seen the naira depreciating rapidly against other foreign currencies and the face of poverty showing itself evidently every day in the streets of Nigeria, at this point it is very hard to see a way out of this situation we are in as a country.

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Contents provided and/or opinions expressed here do not reflect the opinions of The Pacesetter Frontier Magazine or any employee thereof.

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