The Exit of Multinationals from Nigeria over Business Climate
By Zekeri Idakwo,
Let us just admit it. The business environment in Nigeria is gradually becoming a threat not only to the smooth operations of small-scale businesses, but also multi-national companies in the country.
Some few weeks ago, multi-nationals coys such as MTN and NESTLE Plc recorded huge losses, attributed to the recent CBN forex policy. For instance, Nestle Nigeria Plc reported N123.7 losses, while its counterparts MTN also reported N131 billion, losses just within the spate of two weeks.
Also, GSK has announced its plans to halt business operations in Nigeria, as a result of the unfriendly business environment, together with the federal government’s monetary policies.
Glaxo Smith Kline, GSK, is a British multinational pharmaceutical and biotechnology company, with global headquarters in London. Established in 2000 by a merger of GlaxoWellcome and SmithKline Beecham, GSK is the tenth largest pharmaceutical company and ranked behind other similar companies in the world.
The company has its primary listing on the London Stock Exchange . As of August 2022, GSK had a market capitalisation of £70 billion.
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In 2022, it was gathered by Economic Confidential that the company recorded an increased revenue worth £29.324 billion operating income and has well over 70,000 employees.
Regrettably, GSK, MTN, and Nestle have experienced challenges operating in Nigeria. In the case of GSK, they had to temporarily halt operations in 2015 due to currency shortages. MTN also had to contend with a number of regulatory challenges and sanctions in recent years. Nestle PLC has equally faced some challenges in the area of infrastructure and lack of skilled workers.
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It has become obvious that Nigeria’s business environment is no longer conducive for businesses to thrive, especially for multi-nationals like GSK which has a huge revenue impact on the national economy. This current trend is indeed worrisome.
The list of multi-national business conglomerates that left Nigeria or were sold include: South African retailer, ShopRite; Abu-Dhabi-based telecommunication company Etisalat and UK-based Intercontinental Groups, among others.
While there have been reforms to stabilize the country’s business ecosystem in recent years, Nigeria remains a place that several SMEs and multi-national corporations find it difficult to thrive.
The truth is, when a country’s economic climate is favourable, it makes it easier for companies to operate and reduces the risk of unexpected costs, losses or delays. In addition, a business-friendly environment can also help to attract more foreign investment.
A stable and predictable foreign exchange policy would give companies the confidence to invest in the Nigerian market. And local market collaboration, such as partnerships with local businesses and organizations, could help multi-national corporations to better understand and navigate the local business environment.
For instance , a simple, efficient, and transparent tax system can make a big difference for multi-national corporations. It can reduce the administrative burden of doing business and make it easier to comply with regulations.
Moreso, a stable and predictable exchange rate can make it easier for companies to plan their budgets and make long-term decisions. An exchange rate that is too volatile can introduce a lot of uncertainty and risk for businesses. Most especially the current exchange policy.
Equally, a good business environment, and flexible foreign exchange impact positively on companies’ ability to generate profit and revenue. Nigeria’s economy is considered the best in Africa.
This is because the private sector, amid the challenges highlighted, is massively contributing to the nation’s Gross Domestic Product, GDP, aside from government revenue sources. Anything that will hamper their productivity and business operation, therefore must be tackled. Enough of our SMEs dying and multi-national firms fleeing Nigeria as a result of strangulating business climate.
