Economic Crisis: Multinational Exodus Triggers Massive Job Losses in Nigeria

Nigeria is grappling with a severe economic crisis as 16 multinational companies have exited the country over the past three years. This exodus, attributed to the government’s policies on petrol subsidy removal and the unification of FX windows, has resulted in significant job losses and economic instability.

On June 11, Diageo, a UK-based company, announced its decision to sell its 58.02% stake in Guinness Nigeria to Tolaram, joining the likes of Kimberly-Clark, Procter and Gamble (P&G), GlaxoSmithKline (GSK), Unilever, and Sanofi-Aventi Nigeria, which have either exited completely or reduced their operations in Nigeria.

The situation is exacerbated by Unilever Nigeria’s November 2023 announcement to exit the home care and skin cleansing markets in Nigeria, citing the need for a more sustainable business model. Procter & Gamble followed suit, driven by high energy costs, currency depreciation, and security concerns.

Finance Minister Wale Edun acknowledged these challenges, noting that the lack of a liquid foreign exchange market was a primary reason for the multinational exits. He explained that the inability to access foreign exchange severely hindered their operations.

Adewale Oyerinde, Director-General of the Nigeria Employers’ Consultative Association (NECA), revealed that over 15 multinational companies, with a combined workforce of more than 20,000 employees, have either divested or partially closed operations. He warned of the dire consequences for organized businesses, government revenue, and households, highlighting the increased insecurity due to massive job losses.

Oyerinde emphasized the broader impact on the business ecosystem, noting that numerous enterprises within the value chain are at risk of collapse as they lose major clients. The survival of these secondary businesses and their employees is under threat, underscoring the urgent need for attention to this crisis.

Sectoral leaders and analysts warn that the continuous exit of multinational firms could hinder Nigeria’s goal of achieving a $1 trillion GDP by 2026, a target set by President Bola Tinubu. The persistent departure of these companies poses a significant challenge to economic growth.

Data from the National Bureau of Statistics (NBS) indicated that while the services sector drove GDP growth in the first quarter of 2024, the manufacturing sector’s real GDP growth was only 1.49% year-on-year, a decline from the previous year.

Otunba Francis Meshioye, President of the Manufacturers Association of Nigeria (MAN), called for the government to address insecurity, improve electricity supply, and ensure policy consistency. He stressed the importance of incentivizing the manufacturing sector to boost non-oil export earnings.

Dr. Chinyere Almona, Director-General of the Lagos Chamber of Commerce and Industry (LCCI), expressed concern over the increasing exit plans of multinational companies. She urged the government to stabilize foreign exchange availability, improve infrastructure, and engage with the business community to develop solutions to prevent further exits.

Femi Egbesola, National President of the Association of Small Business Owners of Nigeria (ASBON), highlighted the significant contribution of multinationals to Nigeria’s GDP and earnings. He stressed the importance of retaining these investors to ensure economic growth.

Despite the assurances from President Tinubu and Finance Minister Edun about efforts to revamp the economy and attract Foreign Direct Investment (FDI), it remains to be seen whether these measures will halt the exodus of multinational companies from Nigeria.