Alarm Over Nigeria's Loss of N500tn Investment, 120,000 Jobs From Foreign Companies' Exit

• Many foreign companies have left Nigeria in the past few years because of the challenging business environment
• GlaxoSmithKline (GSK), Procter & Gamble (P&G), and others are examples of multinationals that exited the country
• Their exits have left Nigeria with losses running into trillions of naira and job cuts in the range of hundreds of thousands

Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the stock market.

Economic analysts express concerns that Nigeria might be facing a more severe economic crisis than it acknowledges, especially with the departure of certain multinational companies, which took away investments valued at over N500 trillion.

This departure has also led to the loss of approximately 20,000 direct jobs and over 100,000 indirect jobs.

According to The Sun, they argue that the challenges persist because the operating environment remains unfavorable, indicating that the country is still grappling with its economic woes.

Foreign companies exit Nigeria

Over the past few years, numerous foreign companies, particularly manufacturers and energy firms, have withdrawn from Nigeria, attributing the current foreign exchange volatilities, challenges in repatriating dollars, the devaluation of the naira leading to reduced earnings in dollar terms, and a generally difficult operating environment as the main reasons.

Last year, the US manufacturing giant Procter and Gamble announced its departure, merely seven years after establishing a $300 million manufacturing plant in Nigeria.

Other companies, such as GlaxoSmithKline (GSK) and Sanofi-Aventi Nigeria also decided to exit.

Unilever has scaled back some of its manufacturing activities in the country.

Experts warn of consequences to multinational's exit

Daniel Dickson-Okezie, Chairman of the SMEs Group at the Lagos Chamber of Commerce and Industry (LCCI), expressed concern over the troubling trend, highlighting that the departure of foreign companies results in significant losses for Nigeria, both in terms of investment and job reductions.

He said:

“The departure of multinationals has caused Nigeria over N500 trillion in terms of investments. And in terms of direct jobs, over 20,000 direct jobs have been lost and close to 100,000 indirect jobs have been lost.

“There are other consequences of the departure of these companies like increases in the unemployment rate which may move from about 33% to close to 40% before the end of this year. And that will increase the problem of insecurity and a lot of people might move into crime."

He stated that ultimately, this will impact the government's tax revenue and lead to various compounded issues.

Furthermore, other companies reliant on both multinational and local firms may be forced out of business, exacerbating the economic challenges.

He said:

“The environment has become very challenging. I’m talking about the macroeconomic environment. It requires a lot of creativity, innovation and a lot of business strategies to be able to cope with the shocks of the microeconomic conditions."

He added that the good news is that the economy is gradually recovering and the exchange rate is getting better, and we hope to start seeing some improvements in the macroeconomic environment.

Union Bank, six others delisting from NGX

In related news, Legit.ng reported that some major companies, foreign and local, have delisted from the Nigerian Exchange Limited (NGX).

This decision can have various implications, sparking discussions about the motivations behind such moves and their potential impact on the Nigerian capital market.

In an article, Legit.ng unveiled the top seven companies bid farewell to the stock exchange this year, leaving an indelible mark on the nation's financial narrative.

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