Peter Obi, the presidential candidate of the Labour Party in the last general elections, has raised concerns about the increasing number of multinational companies leaving Nigeria.
Citing various reports, Obi attributes this trend to an unfriendly business environment that is symptomatic of a larger governance problem.
Obi highlighted the severe economic impact of this exodus, stating, “I am compelled to address the alarming exodus of multinational companies from Nigeria, which has cost our nation a staggering N95 trillion in the past five years.”
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According to a report by The New Telegraph, cited by him, over ten multinational giants, including GlaxoSmithKline, Equinor, Sanofi-Aventis, Bolt Food, Procter & Gamble, Jumia Food, PZ Cussons, Kimberly-Clark, and Diageo, have exited Nigeria in the past year alone.
Obi quoted several news outlets documenting the reasons behind this mass departure. According to him, The Punch reported, “Multinational firms exit Nigeria over harsh business climate.” He also mentioned The Guardian noting, “Insecurity, high energy costs force companies to leave Nigeria,” while The Nation pointed out, “Poor business environment, inconsistent policies drive companies out of Nigeria.”
These companies consistently cite issues such as insecurity, high energy costs, and inconsistent policies as the primary reasons for their departure. Obi emphasized that these problems are not isolated incidents but reflect deeper governance issues.
“These issues are not coincidental but symptomatic of a larger governance problem,” he stated.
Voices of Economists and Business Leaders
Economists and business leaders across Nigeria have echoed Obi’s concerns. Dr. Muda Yusuf, the CEO of the Centre for the Promotion of Private Enterprise, stated that without significant reforms, the trend of multinational exits is likely to continue, further harming the economy.
The Irony of Government Efforts to Increase FDI
The irony of this situation is highlighted by President Bola Tinubu’s efforts to attract foreign investment. Despite his administration’s global efforts to bring in new investors, the exodus of established multinationals sends a contradictory message about Nigeria’s business environment.
President Tinubu has been actively engaging with international business communities, traveling extensively to pitch Nigeria as an attractive investment destination. During his recent visits to the United States and the Middle East, Tinubu assured potential investors of his administration’s commitment to economic reforms and a stable business climate.
However, the departure of major companies like Procter & Gamble and Diageo presents a stark contrast to these assurances.
Call to Action for Leadership
Obi called on the nation’s leadership to urgently address these challenges. “The responsibility lies with our leadership, those we put in charge to urgently address these challenges,” he said.
He stressed the need to create a business-friendly environment that fosters investment, innovation, and growth.
To create a friendly business environment, Obi suggested reforms targeting critical areas such as infrastructure, with a focus on the power sector to reduce operational costs and attract foreign investment. He also mentioned simplifying regulatory processes as another key initiative aimed at easing business establishment and operation, including updating regulations and enhancing transparency.
His proposed reforms include improving Nigeria’s ranking in the Ease of Doing Business index. This involves reforms in business registration, property rights enforcement, and contract handling. Obi stresses the importance of investing in education and vocational training to cultivate a skilled workforce capable of meeting industry demands.
He also emphasized lowering energy costs to enhance business efficiency, while promoting good governance practices to foster sustainable economic development through transparency and accountability in government operations.
Impact on the Economy
The exodus of multinational companies has far-reaching implications for the Nigerian economy. Firstly, it leads to significant job losses. For instance, when GlaxoSmithKline exited, it impacted hundreds of direct and indirect jobs, adding to the already high unemployment rate. Secondly, the departure of these companies results in a loss of foreign direct investment (FDI), which is crucial for economic growth and development. According to the National Bureau of Statistics, FDI into Nigeria dropped by 19.4 percent to US$377.4 million in 2023 from US$468.1 million in 2022 reflecting the deteriorating business environment.
Moreover, the exit of these firms undermines Nigeria’s industrial base and limits access to quality goods and services. The pharmaceutical sector, for example, has suffered from the exit of companies like Sanofi-Aventis, which provided critical medicines and healthcare solutions.
Obi urged Nigerians to unite in transforming the country into a business-friendly nation that attracts investment and ensures prosperity for all citizens.
“Let us unite to transform Nigeria into a nation conducive to business, attractive to investment, safe and prosperous for all citizens,” he said. He envisioned a Nigeria that becomes a beacon of hope and progress in Africa and the world.
Obi’s call to action has been echoed by many prominent Nigerians, underscoring the urgent need for systemic reforms to address the underlying issues driving multinational companies away from Nigeria. He believes that by tackling these challenges head-on, Nigeria can create a more stable and attractive environment for both local and international businesses.