2024 has witnessed some significantly negative economic developments in Nigeria. According to the Nigerian Bureau of Statistics, Nigeria’s GDP growth rate has slowed to 1.9% in the first quarter of 2024, down from 3.4% in the same period of 2023. Inflation has surged to 36.69%. These developments have created a challenging environment for both consumers and businesses. Last year, fast-moving consumer goods recorded FX losses of N420 billion. This year, in the first quarter alone, they incurred additional losses of approximately N300 billion due to foreign exchange fluctuations.
These challenges led several multinational corporations to exit the Nigerian market last year. This has ranged from household names like GlaxoSmithKline (GSK) and Procter & Gamble (P&G) to established players in pharmaceuticals (Sanofi) and consumer goods (Kimberly-Clark). This trend raises concerns about the health of the Nigerian economy and its attractiveness to foreign investors. Last year, foreign direct investment (FDI) into Nigeria declined by 19.4%. On that note, let’s look at the multinationals that have left Nigeria in 2024 and the reasons behind these departures.
1. GlaxoSmithKline GSK
Last year, drugs and consumer healthcare company, GlaxoSmithKline (GSK Nigeria), ended its 51-year existence in Nigeria after it announced plans to discontinue operations within the country. GSK’s departure follows a reported 15% decline in sales over the past two years, largely due to currency volatility and regulatory challenges. Last year, its half-year sales dropped to 7.75 billion naira ($9.82 million) from 14.8 billion naira in the same period a year ago. The multinational adopted a distributor-led model instead. The company also said it would return cash to its shareholders, with the exception of its parent company, GSK.
2. Procter and Gamble (P and G)
Before its exit, Procter and Gamble (P&G) had been operating in Nigeria for over 25 years. This means it had experienced all the economic heat, from fluctuating exchange rates and inflation to changes in government. Despite these challenges, P&G managed to build a strong presence and brand loyalty among Nigerian consumers. In 2017, P&G completed the $300 million Agbara plant, the largest single investment by a non-oil firm in Nigeria. However, the persistent economic difficulties caught up to the multinational late last year when it announced that it was discontinuing manufacturing in Nigeria and pivoting to import-only activity.
3. Sanofi
Sanofi is a global healthcare and pharmaceutical company known as a major supplier of vaccines like polio, influenza, meningitis, and rabies. Last year, it was reported that the company had started plotting its exit after it announced an exciting transformation of its business model in Nigeria. Sanofi later confirmed that they were indeed ceasing direct operations in Nigeria. The key culprit behind their exit? Nigeria’s foreign exchange crisis. This crisis has made it extremely difficult and expensive for Sanofi to import the necessary medicines. However, Sanofi announced it would be partnering with a third-party distributor to ensure Nigerians still have access to their critical medications.
4. Equinor
On the 29th of November, after over 30 years of operating in Nigeria, Equinor, a major player in the energy sector, announced it had reached an agreement to sell its Nigerian business to Chappal Energies, effectively exiting the country. Over the years, Equinor has always played a significant role in Nigeria’s oil sector. The company held a 20.21% stake in the Niger Delta’s Agbami, the world’s biggest oil discovery in 1998. Interestingly, Equinor continues to operate in four other African nations: Algeria, Angola, Libya, and Tanzania.
5. PZ Cussons
After over 140 years of operating in Africa, British manufacturer PZ Cussons became a household name. That is until reports surfaced that the company is considering exiting Africa due to economic challenges in Nigeria, its largest African market. In the last year, the devaluation of the Nigerian naira has significantly hurt PZ Cussons’ sales, especially when measured in British pounds. Also, rising inflation has squeezed consumer spending on PZ Cussons’ products like dishwashing liquid and cooking oil. Last month, it was reported that the company’s market value dropped by 19.94% in two days due to low investor confidence.
6. Kimberly-Clark
Last month, Kimberly-Clark announced its decision to exit its business in Nigeria after almost 15 years. The company stated that it was faced with rising production costs and declining profit margins due to economic developments in the country. As a result, the company would close its $100 million manufacturing facility launched in Lagos in 2022. Kimberly-Clark also said it was closing its commercial office in Lagos, which would cease the manufacturing, marketing, and sale of its Huggies and Kotex products in Nigeria. Three days after its announcement, the American multinational began shutting down its operations in Africa’s most populous country by laying off nearly 90% of its employees.
7. Diageo
Diageo, the beverage giant behind Guinness, has become the latest multinational to pull out of Nigeria. Two days ago, the multinational announced they were exiting the Nigerian market. Diageo pointed to declining consumer purchasing power and increased taxation as key factors in its decision to leave Nigeria. Between July 2023 and March 2024, Diageo suffered a massive N61.9 billion loss. However, Diageo has struck a deal to sell its controlling stake in Guinness Nigeria to Tolaram Group, a Singaporean conglomerate. The agreement, expected to be finalized in 2025, will see Tolaram take over Guinness Nigeria’s operations. Diageo will retain ownership of the Guinness brand globally and license its production and sales to the new owner.