Nigeria is seeing many big companies, like Kimberly-Clark and Procter & Gamble (P&G), leave the country. This is causing big problems for the Nigerian economy, and everyone from policymakers to everyday people is worried.
When companies like Kimberly-Clark, which invested $100 million, leave, it hurts a lot. About 10,000 jobs were lost, and important products like sanitary items became hard to find.
In the last five years, Nigeria has lost about N95 trillion because of these companies leaving. We need to understand why and find ways to bring them back.
Big companies need a stable and clear set of rules to follow. In Nigeria, the rules keep changing, making it hard for these companies to plan for the future. They can’t deal with sudden changes like new tax laws or import restrictions.
Another big reason companies are leaving is that Nigerian people don’t have enough money to buy their products. When people have less money, they buy less, and companies make less profit.
Dr. Emeka Okngwu from AntHill Concepts Limited said, “High inflation, unemployment, and poverty mean people have less money to spend. For big companies selling everyday items, this means fewer sales and less profit.”
Interestingly, Dr. Ayo Teriba from Economic Associates noted that these companies are not just leaving Nigeria; they are also leaving places like North America and Latin America. This shows the problem is not just with Nigeria but with the companies themselves.
Dr. Teriba explained, “There are two main reasons: high costs and strategic risks. High operating costs, currency problems, inflation, and high-interest rates make it hard for these companies to run their business. When costs go up and profits go down, companies decide to leave.”
However, some companies like Guinness are finding other ways to stay. Guinness sold its bottling operations but kept its brand in Nigeria. This shows they are adjusting their plans to manage costs better.
Dr. Teriba also mentioned that American tech companies are moving some of their work to countries with cheaper labor. For example, they might build their products in a country with lower wages but keep the brand in the home country. This is similar to what Guinness did in Nigeria.
When Procter & Gamble left, they said they were keeping their market share but just couldn’t afford to make their products in Nigeria because of high costs.
Strategic risks, like new technology, can also make companies leave. For instance, if a new, cheaper way of making energy comes along, companies that can’t adapt may need to leave.
Companies that can fix problems with energy, transport, and communication are more likely to stay in Nigeria. Dr. Muda Yusuf from the Center for the Promotion of Private Enterprise (CPPE) said that Nigerians’ purchasing power has gone down a lot in recent years. Local companies are adjusting, but big companies with expensive brands find it hard to compete.
Dr. Yusuf noted that foreign investors don’t like unstable currencies because it makes it hard to plan. He said, “They are not used to the unpredictable environment in many African countries, not just Nigeria.”
Operating in developing countries is tough for big companies. Local businesses and companies from places like China and India know how to handle these challenges better than multinationals.
Big companies have strict global standards, making it hard for them to adapt when things change. For example, Procter & Gamble’s premium brand Ariel detergent is too expensive for many Nigerians, so local brands that are cheaper are taking over the market.
Dr. Yusuf said, “While some local companies are changing to meet new conditions, big multinationals stick to their old ways, which is why they often leave when things get tough.”
Dr. Emeka Okengwu pointed out that it’s not just about foreign exchange problems; people simply can’t afford to buy what these companies are selling. This problem gets worse with poor transport and storage infrastructure.
Local companies know the market better and can work with less money, giving them an edge over multinationals. Moses Igbrude from the Independent Shareholders Association urged the government to stabilize the currency and provide enough foreign exchange for businesses. He also said investing in better infrastructure, especially power, can lower costs and improve the business environment.