In recent years, Nigeria has seen a growing number of local and multinational companies either shut down or move their operations elsewhere. Economic difficulties, currency fluctuations, and rising operational costs largely drive this trend.
While the Nigerian government celebrates recent multi-million dollar investments, many multinational companies have chosen to exit the country by selling their operations or divesting their stakes to new investors.
The departure of these companies, particularly this year, can be attributed to Nigeria’s tough economic climate. Challenges such as the naira’s poor value, rising inflation and interest rates, and weakening consumer purchasing power have all played a role.
According to the Manufacturers Association of Nigeria (MAN), about 767 manufacturing companies closed their doors last year alone. Additionally, 365 companies faced significant financial strain in 2023 due to inflation, high interest rates, and currency instability.
Although small and medium-sized businesses are the most affected by Nigeria’s harsh economic environment, even large multinational companies are not immune to these challenges.
One of the latest companies to announce its departure is South African grocery retailer Pick n Pay. The company confirmed on Monday that it would be selling its 51% stake in a joint venture and leaving the Nigerian market. CEO Sean Summers explained that this decision is part of the company’s broader restructuring strategy beyond its home market.
Pick n Pay entered Nigeria in 2016 through a partnership with A.G. Leventis (Nigeria). The company opened its first store in 2021, eventually expanding to two locations. This move was initially seen as a strategic step into one of Africa’s largest consumer markets, hoping to capitalize on Nigeria’s growing demand for grocery retail.
However, the company’s exit reflects how economic challenges, currency instability, and regulatory issues have made its investment in Nigeria’s competitive retail sector less viable. Economist Vincent Nwani, former Director of Research and Advocacy at the Lagos Chamber of Commerce and Industry, noted that more than 10 companies shut down operations in 2020 alone, while over 20 companies left the country.
Here’s a breakdown of companies that left the Nigerian market from 2020 to mid-2024:
2020:
In 2020, over ten companies exited Nigeria due to the growing effects of economic instability and other operational challenges. Notable closures included:
• Standard Biscuits Nigeria Ltd
• NASCO Fiber Product Ltd
• Union Trading Company Nigeria PLC
• Deli Foods Nigeria Ltd
2021:
The number of companies leaving Nigeria increased in 2021, with over 20 firms shutting down their operations. Some of the notable exits included:
• Tower Aluminium Nigeria PLC
• Framan Industries Ltd
• Stone Industries Ltd
• Mufex Nigeria Company Ltd
• Surest Foam Ltd
2022:
The trend continued in 2022, with over 15 well-known brands halting their operations in the country, including:
• Universal Rubber Company Ltd
• Mother’s Pride Ventures Ltd
• Errand Products Nigeria Ltd
• Gorgeous Metal Makers Ltd
2023:
The wave of exits carried on into 2023, with over ten major companies leaving Nigeria due to concerns over profitability and difficult business conditions. Notable departures included:
• Unilever Nigeria PLC
• Procter & Gamble Nigeria
• GlaxoSmithKline Consumer Nigeria Ltd
• ShopRite Nigeria
• Sanofi-Aventis Nigeria Ltd
• Equinox Nigeria
• Bolt Food & Jumia Food Nigeria
2024:
In the first half of 2024, at least five major companies left the market, as the challenging business environment persisted. Among them were:
• Microsoft Nigeria
• Total Energies Nigeria (impacted by divestment strategies)
• PZ Cussons Nigeria PLC
• Kimberly-Clark Nigeria
• Diageo PLC
Why Are The Top Companies Leaving Nigeria?
In 2023, the Nigerian economy was significantly impacted by two key decisions made by Bola Tinubu’s administration. The government removed subsidies and allowed exchange rates to float, aiming to prevent Nigeria from facing bankruptcy and to initiate a new phase of economic reforms.
However, these decisions led to unforeseen consequences. Inflation has continued to rise, worsening the economic situation for consumers. By October 2023, inflation had reached 27.33%, the highest in 18 years, marking the ninth consecutive month of increase.
Furthermore, several manufacturing companies have either closed down or moved their operations abroad. Within a year, more than ten major companies left Nigeria, including Unilever Nigeria PLC, Procter & Gamble Nigeria, ShopRite Nigeria, Sanofi-Aventis Nigeria Ltd., Equinox Nigeria, and Bolt Food & Jumia Food Nigeria.
Some international companies have reduced their presence in Nigeria by selling their stakes, transferring ownership, or scaling back operations. In June 2024, Diageo’s beverage company sold its 58.02% shareholding in Guinness Nigeria to the Tolaram Group.
Microsoft also announced the closure of its Africa Development Center in Lagos on May 8, 2024. Microsoft, one of the largest contributors to Nigeria’s economy, was responsible for a N94 trillion loss in the nation’s output. A calculation showed a cumulative loss of N24 trillion in potential output and investment between 2020 and 2022, with larger multinationals like Microsoft accounting for more than half of this loss.
Despite these challenges, Microsoft has stated it will not end its activities in Nigeria, but it is investing $100 billion in a new data center in Kenya, following the closure of its $100 million center in Nigeria. The key question remains: why are these companies pulling out of Nigeria?
While companies provide various reasons for their exit, common factors include low consumer demand, currency issues, and difficult macroeconomic conditions. International corporations like Procter & Gamble, GSK, and Unilever have cited these as key reasons for their downsizing and departure from Nigeria.
As a result, they have closed factories, reduced their workforce, and shifted to import-only models or contracted out distribution to regional partners. These companies have been leaders in Nigeria’s fast-moving consumer goods (FMCG) sector for years.
P&G’s CFO, Andre Schuten, explained that Nigeria’s macroeconomic conditions have become too challenging to manage. As a U.S. dollar-denominated company, P&G finds it difficult to generate value in Nigeria. He noted at Morgan Stanley’s Global Consumer and Retail Conference in New York that the naira-to-dollar exchange rate has doubled since the country adopted the floating exchange rate system.
Despite Nigeria’s large population, Schuten emphasized that the market has become too small, with P&G’s Nigerian operations accounting for just $50 million in net sales, compared to the company’s $85 billion in global sales.
Interestingly, P&G is also making cuts in Argentina, which faces similar inflation issues but has established a $400 million business in the country, serving 46 million people, and proving more effective than in Nigeria. This highlights the ongoing challenges foreign companies face in the Nigerian market.
