The exit of multinationals could worsen the economic challenges for Nigerians and the economy as a whole.
According to experts, unless necessary steps are taken to prevent more companies from exiting, the economy will continue to experience job losses, decline in foreign investments, increased inflationary pressures, instability in foreign exchange, and reduction in government revenue.
“The government should implement measures to stabilise and ensure the availability of foreign exchange for businesses, particularly those operating in dollar-denominated environments. We implore the government to create a more flexible and transparent foreign exchange policy to address scarcity issues,” Chinyere Almona, the director-general of the Lagos Chamber of Commerce and Industry, said.
She urged 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.
“The Central Bank of Nigeria should prioritise the stability of the country’s currency and adopt the right policy mix to ensure price stability.”
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Uchenna Uzo, professor of marketing and faculty director at the Lagos Business School, said the government should work on reducing the inflationary trend which has reduced consumers’ demand and purchasing power.
“Create tax breaks and pick some top sectors to grow more intentionally and provide some policy reform that will make it easy for people to do trade and business in those promising sectors,” he added.
According to Uzo, there is a need to be an investment-friendly road map at the state level that can make it easier for investments and businesses to thrive. “Once there is that comparative advantage across the states, it means that even the multinationals will now know where their factories will be.”
Over the past seven years, several manufacturers, especially in the fast-moving consumer goods industry, have either left the country or stopped production of some of their products as a result of the difficult operating environment.
Problems such as rising interest rates, surging inflationary pressure, and foreign exchange volatility are impacting input costs, operating expenses and the general profitability of businesses in the country.
Some of the companies that have exited the country are Surest Foam Limited, Mufex, Framan Industries, MZM Continental, Nipol Industries, Moak Industries and Stone Industries.
In the second half of this year, multinationals such as Procter & Gamble, GlaxoSmithKline Consumer Nigeria, Bolt Food, Sanofi and Equinor have announced plans to exit the country.
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Multinationals do not operate in an environment where they cannot project how the business environment will be in the next six months or one year, said Femi Egbesola, national president of the Association of Small Business Owners of Nigeria.
“If nothing is done, more multinationals will continue to leave. So, there should be a total economic and fiscal policy review. The government should look at how to give incentives to some of the multinationals that are remaining. They did it in the past for Dangote where they bought over all the company’s debt, they can also do it for the multinationals,” he added.
In recent months, rising inflationary pressures as a result of the removal of petrol subsidy and naira devaluation, have weakened the purchasing power of consumers and increased the operating costs for businesses.
The removal of the petrol subsidy tripled the petrol price to N617 from N184, causing public transportation providers such as buses, tricycles and motorcycles to raise transportation fares.
The naira has plunged to record lows across markets since the central bank allowed it to weaken by as much as 40 percent against the dollar in June.
The high cost of sourcing FX was one of the major factors that pushed Nigeria’s inflation rate to an 18-year high of 27.33 percent in October from 26.72 percent in the previous month, according to the National Bureau of Statistics.
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“There is no doubt that the business environment is very tough. The government must do everything they can to communicate with the people and industrialists to know their plans to take the economy from this difficult position and to find a way to reduce the harsh business environment,” Adeola Adenikinju, a professor of economics and president of the Nigerian Economic Society, said.
He noted that it was not only the multinational companies that were leaving but the indigenous ones as well, who were also finding it difficult to survive.
Adewale-Smatt Oyerinde, the director-general of Nigeria Employers Consultative Association recommends that Tinubu, as well as Wale Edun, minister for finance and the coordinating minister of the economy, prioritise the survival of local businesses as the primary step before actively seeking foreign direct investment.
He stressed the importance of channeling the 2024 Appropriation Bill to address crucial infrastructural requirements to create a conducive environment for business expansion and laying the groundwork for a prosperous nation.
