Citizens, multinationals, foreign airlines, dogs, cats, bumkum, everyone is leaving. The Nigerian economy is dire and everyone with a thinking cap is avoiding a sink!
The Story Now
Nigeria has recently witnessed a distressing pattern—a mass exodus of foreign companies seeking refuge from an increasingly hostile business environment. The summary is that Nigeria is no longer economically viable for foreign companies to thrive, why?
This departure casts a shadow over the once-promising terrain for serious manufacturing activities.
The Looming Challenges
High Cost Quagmire: The exodus is not a singular event; rather, it’s a ripple effect echoing the sentiments of major players like Unilever, GlaxoSmithKline, Sanofi, Procter and Gamble, and Bolt.
The catalysts for their exit include the exorbitant costs of foreign exchange, escalating energy expenses, the weight of multiple taxation, a compromised criminal justice system, and growing insecurities.
Manufacturers Turn Importers: Once pillars of local manufacturing, these companies are now restructuring to become importers. Unilever’s decision to cease manufacturing popular products like Omo and Lux exemplifies this trend, driven by a desire to reduce exposure to currency devaluation and liquidity risks.
New Entrants Deterred: The departure of longstanding manufacturing giants raises a poignant question: in the wake of this exodus, what serious manufacturing outfit would willingly invest in Nigeria? The allure of the market seems to be overshadowed by the challenges that have led to the exit of those who have been there for decades.
Post Mortem Analysis
1. Infrastructure Quandary: The struggle with basic infrastructure, encompassing power supply, transportation, and communication, remains a persistent challenge, impacting operational efficiency and driving up costs.
2. Regulatory bottlenecks: A convoluted and unpredictable regulatory framework poses obstacles for businesses. Streamlining regulations and enhancing transparency emerge as imperative solutions.
3. Security Burden: Political instability and security concerns contribute significantly to the decisions of companies to exit, raising questions about the safety of investments.
4. Bureaucratic Hurdles: Cumbersome bureaucratic processes and corruption act as impediments to seamless business operations. Simplifying administrative procedures and enhancing transparency are critical remedies.
5. Taxation albatross: High and unpredictable taxes act as deterrents for businesses. Clarity and consistency in tax policies are essential to attract and retain foreign companies.
6. Currency Volatility Woes: Fluctuations in the exchange rate impact profitability. Measures to stabilize the currency are necessary for providing businesses with much-needed predictability.
President Tinubu’s Step
President Bola Tinubu’s appeal following the recent exodus of several multinational companies from the country in the past months fell on deaf ears.
The president tried to pass it off in a statement but his appeal was listless.
He had said:
“We are very focused on resolving all investment-related issues. There is no bottleneck that is too difficult for us to remove in our determined march toward making Nigeria the African haven for large-scale investment in all key sectors.”
Crafting a Resilient Future
In response to this economic downturn, the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) advocates for an urgent review of economic policies.
This entails a thorough examination of the short-term impact on commitments already made by affected companies, with a view to reversing the trend.
Also, there is a need to prioritize investments in infrastructure and power supply is paramount. Offering tax incentives and fostering a transparent foreign exchange policy are indispensable measures to reignite investor confidence.
The Lagos Chamber of Commerce and Industry (LCCI) implores President Bola Tinubu’s government to adopt a more flexible and transparent foreign exchange policy to address scarcity issues.
Meanwhile, beyond economic policies, Nigeria must reimagine its appeal to foreign investors. Infrastructure enhancement, streamlined regulations, assurances of political stability, and attractive incentives for foreign investment form the cornerstone of this approach.
One More Thing
As Nigeria grapples with the departure of foreign companies, will strategic reforms and a holistic approach revive its image as an attractive hub for global investment?
The answer lies in decisive action, transparent policies, and a commitment to addressing the multifaceted challenges that have led to this exodus.
Written by Fortune Omosola
