The Organised Private Sector (OPS) is worried that the trend of increased mass exodus, plans to exit and a reduction in involvement in the Nigerian market by multinational corporations are a threat to the Nigerian economy.
To this end, the OPS has advised the government to implement measures to stabilize and ensure the availability of foreign exchange for businesses, particularly those operating in dollar-denominated environments, reports Saturday Sun.
The stakeholders also implored government to engage multinational corporations and the business community in a dialogue 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 Chief Financial Officer of Procter & Gamble, Andre Schulten, earlier in the week indicated that P&G plans to transition its Nigerian operations to an import-only model, effectively dissolving its on-ground presence in the country.
The company cited challenges in conducting business as a dollar-denominated organisation and attributed its strategic decision to the macroeconomic conditions in Nigeria.
P&G is the manufacturer of common Nigerian household items. The company has a portfolio valued at $85 billion with Nigeria contributing $50 million in net sales. The development is coming less than a month after Sanofi exited the country.
In November 2023, Sanofi-Aventis Nigeria Limited, a French pharmaceutical company, said it would adopt a third-party model for the distribution of its products in Nigeria beginning from February 2024.
Similarly, in August, GlaxoSmithKline (GSK) Consumer Nigeria Plc announced plans to cease operations, transferring its business activities to a third-party organisation. Surest Foam Limited, Mufex, Framan Industries, Moak Industries, Deli Foods, Stone Industries, MZM Continental and Nipol Industries are among companies that have shut down fully or partially in recent years.
Unilever Nigeria, GlaxoSmithKline and Guinness Nigeria Plc have also exited the country.
President of the Manufacturers Association of Nigeria (MAN), Francis Meshioye, said some international manufacturing firms exited Nigeria as a result of the power crisis, coupled with the unpredictability of the country’s foreign exchange rate before it was recently unified.
He urged the federal government to take pragmatic steps to save the sector from total collapse. He further attributed the growing closure pattern of companies to a difficult operating en-vironment, unstable electricity, high interest and exchange rates, smuggling, high cost of power, as well as multiple taxations and levies imposed on the manufacturers by the various levels of government, among other factors. He noted that additional obstacles encountered by manufacturers are unfavourable loan terms to the sector, and that firms continued to groan as a result of excessive borrowing rates and a lack of long-term credit.
He pointed out that it was a very concerning development that should be stopped given Nigeria’s unrivalled leadership role as the hub of industrial production in West Africa. President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Delete Kelvin Oye, urged the government to work collaboratively with the private sector to develop policies that will stimulate economic growth and create job opportunities in the country.
Oye was positive that with the right policies in place, Nigeria’s economy can be revitalised and the country can become a hub for business and investment in Africa. He viewed that while the current administration has commendably set Nigeria on a long-term path to economic progression, it has been noted that some of the immediate economic policies of President Ahmed Tinubu have had an adverse effect on certain sectors of the country.
“In particular, the sudden rise in the price of petrol and abolition of the official naira rate has caused a significant backlash, eroding the already earned income and trading capital of several multinational companies that had established their previous earnings based on the official naira rate at the time.
“As a result, there has been a steady exodus of multinational companies and the collapse of several local companies, resulting in significant job losses and economic damage.”
He urged the government to urgently review the short-term impact of its economic policies as it relates to commitments already concluded for remittances/raw materials by the affected companies/ businesses to reverse the trend of companies leaving Nigeria.” The association also asked the government to prioritise infrastructure and power supply investments and provide tax incentives to encourage businesses to invest in Nigeria. In its reaction, the Lagos Chamber of Commerce and Industry (LCCI), recommended that the government should implement measures to stabilize and ensure the availability of foreign exchange for businesses, particularly those operating in dollar-denominated environments.
Dr Chinyere Almona, the Director General of the chamber, implored the government to create a more flexible and transparent foreign exchange policy to address scarcity issues.
“Further, the chamber urges the government to engage multinational corporations and the business community to understand their challenges. The CBN should prioritize the stability of the country’s currency and adopt the right policy mix to ensure price stability,” she said.