The exodus of multinationals from the Nigerian economy has resulted in a N94 trillion loss of 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. Multinationals have been scaling down operations, transferring ownership, or selling stakes, with the most recent being the sale of Diageo’s 58.02 percent shareholding in Guinness Nigeria to Tolaram Group on June 11, 2024.
Dr. Nwani stated that his calculations considered the valuations of multinationals and their value addition by five to ten times. He analyzed the contributions of these companies, including employment figures, salaries, and turnover, to arrive at the N94 trillion figure. The notable exits included Standard Biscuits Nigeria Ltd, NASCO Fiber Product Ltd, and Deli Foods Nigeria Ltd in 2020; Tower Aluminium Nigeria PLC and Surest Foam Ltd in 2021; Universal Rubber Company Ltd and Gorgeous Metal Makers Ltd in 2022; and Unilever Nigeria PLC, Procter & Gamble Nigeria, and ShopRite Nigeria in 2023. In the first half of 2024, significant exits included Microsoft Nigeria, Total Energies Nigeria, and Diageo PLC.
Microsoft Corporation’s announcement to close its Africa Development Centre in Lagos contributed significantly to the loss figure. The closing of the center, which involved a $100 million investment, was followed by a proposed $100 billion investment in a Kenyan data center. Dr. Nwani cited the foreign exchange crisis, worsening security conditions, and the power supply crisis as the top reasons for these exits. He emphasized that if these issues persist, more notable companies might leave Nigeria.
Prof. Olusegun Ajibola from Babcock University highlighted the exchange rate challenge as a key reason for multinationals’ exits. He explained that foreign investments converted to naira often lose value when repatriated due to the depreciating currency. Despite these challenges, he noted that Nigeria remains an attractive market for international investors due to its robust market potential. Ajibola mentioned that while some multinationals are leaving, other companies are entering the Nigerian market, as seen in Tolaram Group’s acquisition of Diageo’s shareholding in Guinness Nigeria.
The Nigerian government needs to address the foreign exchange instability, improve security conditions, and resolve the power supply crisis to retain existing multinationals and attract new investments. By tackling these challenges, Nigeria can mitigate the economic impact of multinationals’ exits and foster sustained economic growth.
