Over the last five years, Nigeria has witnessed an alarming exodus of major multinational companies, leading to a ₦95 trillion economic loss, as reported by industry experts and economic analysts.
he trend, spanning from 2019 to 2024, includes high-profile companies like Procter & Gamble (P&G), Unilever, GlaxoSmithKline (GSK), Sanofi, Microsoft, and others. Their exit has been largely driven by high operational costs, volatile currency rates, and dwindling consumer purchasing power.
1. High Operating Costs and Currency Instability
- Procter & Gamble (P&G): After three decades of manufacturing in Nigeria, P&G ceased local production in 2023, citing rising operational costs. The company now imports its goods to mitigate expenses associated with Nigeria’s erratic power supply and currency devaluation. With prices of imported materials and local production costs skyrocketing, the profitability of brands like Pampers and Ariel took a hit, making continued local production unsustainable. Source: Nairametrics
. - Unilever and GSK: Unilever and GSK faced similar hurdles, with GSK announcing the sale of its consumer healthcare division in Nigeria in 2023. High import duties and challenges with currency repatriation added pressure, prompting GSK to exit its remaining Nigerian holdings.
2. Security Concerns and Regulatory Uncertainty
- Shell and Equinor: Security challenges, especially in the Niger Delta, have forced energy giants like Shell to divest substantial stakes in their Nigerian oil blocks. Equinor, Norway’s largest energy company, similarly exited by selling its 20% stake in the Agbami oil field to a local firm, Chappal Energies, in 2023. The insecurity around oil assets not only endangered investments but also drove operational costs up significantly.
- Sanofi: Known for its pharmaceuticals, Sanofi also exited due to regulatory hurdles and heightened operational expenses, focusing on regions with more favorable business environments.
3. Dwindling Purchasing Power and Local Competition
- Kimberly-Clark and PZ Cussons: With rising inflation, many Nigerian consumers have shifted to more affordable alternatives, making it difficult for premium brands to retain their market share. Kimberly-Clark, famous for brands like Huggies, and PZ Cussons, which produces Imperial Leather, have seen reduced sales due to weakened consumer purchasing power, pushing both companies to scale down or exit.
- Microsoft: In 2024, Microsoft shut down its Africa Development Centre in Lagos. While the tech giant will retain some digital operations, its decision was influenced by high costs and the viability of alternative, more stable markets in East Africa, particularly in Kenya.
4. Shift in Strategic Focus
- Pick n Pay and ShopRite: South African retailer Pick n Pay has hinted at leaving Nigeria soon, mirroring ShopRite’s exit from its Kano outlet in 2023. For both, competition from local stores and issues like forex scarcity have made operations unsustainable. Additionally, ShopRite’s departure from Nigeria’s northern regions reflects a shift towards more profitable markets.
The departure of these multinational firms signifies a broader shift in Nigeria’s economic landscape. Economic analysts, including Dr. Muda Yusuf, highlight that without addressing key issues like currency stability, infrastructure, and security, the Nigerian market may continue to be inhospitable to foreign investment. For now, Nigeria’s struggling purchasing power, regulatory unpredictability, and high operating costs are reshaping the nation’s economy as it leans more on local businesses to fill the void left by multinationals
