SINCE President Bola Tinubu assumed office on May 29, 2023, Nigeria has witnessed a steady exit of foreign companies, leaving behind a trail of uncertainty and economic instability.
In the past year, at least seven multinational corporations have pulled out of the country, with most of the organisations citing unfavourable business environments caused by the unavailability of foreign exchange. Most of these companies are pharmaceutical, household and food companies, The ICIR reports, as part of the series to track the first year of Tinubu’s administration tagged, “Tinubu’s one year in office“. See the series here.
As the dust settles, the departures of these companies have led to far-reaching implications for Nigeria’s economy, workers, and future investments.
In this report, The ICIR highlights the companies that have left the country and the reasons behind this mass exit.
GlaxoSmithKline
GlaxoSmithKline announced its exit from Nigeria in August 2023 after 51 years of operation in the country. GlaxoSmithKline Consumer Nigeria Plc was incorporated in Nigeria on June 23, 1971, and commenced business on July 1, 1972, under the name Beecham Limited.
The firm is a healthcare company that researches, develops, and manufactures pharmaceutical medicines, vaccines, and consumer healthcare products such as Panadol, Andrews liver salt, Macleans, Ampiclox, and Sensodyne, amongst others.
The ICIR reported that the company attributed its departure from Nigeria to the government’s foreign exchange unification policies, which have led to persistent currency issues and dollar scarcity, severely impacting its manufacturing operations and production capabilities.
The report also noted that as a result of the exit, Nigeria would now have to import and pay more for the prescriptible and off-the-counter drugs made by the company
Equinor
On November 29, 2023, Equinor announced its departure from Nigeria after over 30 years of operations, revealing that it had sold its business interests, including its stake in the Agbami oil field, to Chappal Energies, a Nigerian-owned company.
The Norwegian oil firm will divest its subsidiary, Equinor Nigeria Energy Company (ENEC), which holds a majority stake in oil mining lease (OML) 128, including a significant interest in the Agbami field, operated by Chevron.
While the company didn’t disclose its reasons for leaving, it stated that the transaction’s completion is contingent on meeting certain conditions, including regulatory and contractual approvals from both parties.
Sanofi
Sanofi-Aventis Nigeria Limited, a French pharmaceutical company, announced on November 7, 2023, that it would adopt a third-party distribution model for its products in Nigeria, effective February 2024.
The company, a significant supplier of vaccines, cited Nigeria’s economic challenges, particularly the foreign exchange crisis, as the reason for this decision. However, Sanofi aims to increase efficiency and sustainably reach patients and the medical community through this new model, which involves partnering with a single strong distributor with extensive geographic coverage.
On February 2, 2024, CFAO Healthcare, a subsidiary of the French conglomerate CFAO Group, announced its expansion with Sanofi, strengthening its strategic partnership.
Procter & Gamble
On December 5, 2023, Procter & Gamble (P&G) announced its decision to cease operations in Nigeria after three decades, transitioning to an import-only model.
According to The ICIR, this decision was driven by Nigeria’s challenging business environment, largely due to dollar-denominated operations and unfavourable macroeconomic conditions.
The P&G’s chief financial officer, Andre Schulten, mentioned that operating in certain markets like Nigeria and Argentina had become increasingly challenging due to these macroeconomic factors.
A few days after the announcement, Segun Ajayi-Kadir, the director-general of the Manufacturers Association of Nigeria (MAN), expressed concerns about P&G’s departure, warning that other manufacturers might also consider exiting the country.
Bolt Food and Jumia Food
In December 2023, Bolt Food decided to exit Nigeria after operating for two years in the country. The company cited the need to streamline resources and enhance overall efficiency as the reason for its departure.
Bolt Food was launched in October 2021 by the ride-hailing company to compete with rivals like Jumia Food and Gokada, making food access easier in Lagos.
Similarly, Jumia Food also exited the Nigerian market in December 2023. Initially launched as Hellofood in 2012, it rebranded in 2019 under the Jumia Group.
Jumia Food was one of the pioneers of online food delivery in Nigeria and had the widest geographic coverage before its departure.
Jumia also discontinued its services in other countries, including Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria. Jumia’s CEO, Francis Dufay, stated that the company would now focus on its core physical goods business and payment platform.
Microsoft
On May 8, 2024, Microsoft announced its decision to close its African Development Centre (ADC) in Ikoyi, Lagos.
Although the company did not provide a specific reason for this closure, it emphasized its continued commitment to operations in Nigeria and its focus on investing in strategic growth areas.
Microsoft launched the innovation centre in 2019 to develop technology solutions from Africa to tackle both regional and global challenges.
Impressed by the initiative’s success, the company established $100 million African Development Centres in Nigeria and Kenya in 2022. Despite the closure of the Nigerian centre, the Kenyan centre will remain operational.
On June 14, 2023, the Central Bank of Nigeria instructed Deposit Money Banks to eliminate the rate cap on the naira at the Investors and Exporters’ (I&E) Window of the foreign exchange market, enabling the national currency to float freely against the dollar and other global currencies.
The floating naira and the resulting dollar fluctuations prompted these companies to exit the market. This has significantly impacted the prices of goods and services, particularly pharmaceutical products. For instance, as of November 2023, the average cost of anti-malaria medication is NGN 2000 , depending on the brand and its effectiveness.
According to World Health Organisation (WHO) data, Nigeria remains the world’s malaria capital, with 97 per cent of its population at risk of the disease.
Divestment of Oil companies
Total Energies, Shell & other International Oil Companies-IOCs are divesting their assets, away from Nigeria with billions of investments going to other African countries with better business environment.
For instance, Total Energies is increasing its stakes in Angola and the Congo.
PZ Cussons
PZ Cussons Plc, in April 2024, said it has commenced a strategic review of its business in Africa, with a consideration of exiting the continent, partly driven by economic challenges in Nigeria such as naira devaluation and inflation, which has significantly impacted the company’s sales and operations, resulting in a 48 percent sales plunge.
Jonathan Myers, CEO of PZ Cussons, emphasised the importance of looking towards the future while respecting the company’s past, indicating that the review’s outcomes could include changes in ownership.
Myers added, “The macro-economic challenges and complexities associated with operating in Nigeria are significant and there is much more to do to unlock the full potential of the business.”
“As such, we have undertaken a strategic review of our brands and geographies and have embarked on plans to transform our portfolio, refocusing on where the business can be most competitive.”
PZ further stated: “In addition to the challenges of the significant exposure to Nigeria, the group is too complex for its size, with financial and human resources spread too thinly to generate consistent returns.”
“This means its competitive advantages have been constrained in comparison to those of both larger multinational companies and some focused, smaller ones,” he further said in a statement that confirmed their exit.
Kimberly-Clark
Also, the American multinational and makers of “Huggies”-Kimberly-Clark has also announced it has made the difficult decision to exit its business in Nigeria after almost 15 years, due to recently refocused company strategic priorities globally as well as economic developments in the country.
Kimberly-Clark will close its manufacturing facility and commercial office in Lagos and will no longer manufacture, market, or sell its Huggies and Kotex products in the country.
Fatimah Quadri is a Journalist and a Fact-checker at The ICIR. She has written news articles, fact-checks, explainers, and media literacy in an effort to combat information disorder.
She can be reached at sunmibola_q on X or fquadri@icirnigeria.org