The number of investors choosing other African countries over Nigeria, despite Nigeria’s economic power, is telling. Between January 2023 and May 2024, several investors have left Nigeria out. Every investor faces the same question: Why should I invest in Nigeria?
“Why should I invest in Nigeria?”
What makes Nigeria attractive in the foreign investment sector? Is it due to the naira’s volatility? Hyperinflation? Insecurity? High import duty? Unemployable workforce? As an investor, I too would be wary of Nigeria’s economic climate, characterised by high inflation, a fluctuating currency, and a challenging business environment.
Countries like Kenya, Ghana, Angola, and South Africa have attracted investments that might otherwise have gone to Nigeria. These countries have offered more stable economic policies, better infrastructure, and favourable business environments. Additionally, North African countries like Egypt and Morocco have become increasingly attractive due to their growing markets and strategic economic reforms.
Several multinational companies have also exited Nigeria for various economic and operational challenges. These companies include:
1. Lazerpay: In April, Lazerpay, a web3 and crypto payment company, shut down its operations. The decision to shut down comes several months after the founder, Njoku Emmanuel, revealed the company’s challenges in raising funds.
2. GlaxoSmithKline (GSK): GSK decided to end its direct commercial operations in Nigeria after 51 years, opting instead to move to a third-party distribution model for its medicines and vaccines.
3. Sanofi-Aventis: The French pharmaceutical giant announced it would close its direct operations in Nigeria by February 2024, shifting to a third-party product distribution system.
4. Procter & Gamble (P&G): P&G decided to dissolve its manufacturing operations in Nigeria, citing difficulties operating within its macroeconomic environment, and will now import its products.
5. Bolt Food: Bolt, the ride-hailing company, ceased its food delivery service in Nigeria in December 2023 to streamline its resources and improve operational efficiency.
6. Mayor Biscuits Company Limited (MABISCO): This local biscuit manufacturer shut down its operations in March 2023, focusing instead on its core business areas due to the challenging business environment.
7. Unilever: While not entirely exiting Nigeria, Unilever Nigeria Plc announced it would cease manufacturing certain products in Nigeria, such as Omo and Lux, and transition to a model that reduces its exposure to currency devaluation and liquidity issues.
8. Equinor Energy (ENEC): In November, Equinor Nigeria Energy Company (ENEC), a Norwegian energy corporation, divested its Nigerian operations. ENEC owns a 53.85% stake in the oil mining lease (OML) 128, including a 20.21% interest in the Chevron-operated Agbami field. The sale of its assets ended Equinox’s over three decades of presence in Nigeria, dating back to 1992.
9. 54gene: After securing $45 million in funding, genomics startup 54gene departed Nigeria in September, concluding a tumultuous year marred by leadership changes, staff complaints, and legal issues despite the substantial funding raise.
Recent rumours suggest that Guinness Nigeria, a subsidiary of Diageo, is leaving Nigeria. Reports suggest that the company may relocate its operations to Ghana, fueled by false claims about selling its Ikeja Brewery site.
By Chioma OKONKWO
