It is no longer news that more than twenty multinational companies have exited Nigeria between 1999 and 2024. These companies include Michelin, Dunlop and Sanofi. Sanofi, a French pharmaceutical company with office at Japaul House, Alausa, Ikeja, Lagos State, has over 110,000 employees in over 90 countries worldwide where it operates, manufacturing anti-polio, anti-malaria and antibiotic drugs among others. The Punch newspaper of 10th January, 2024, under the headline “15 multinationals exit Nigeria in three years – NECA”, reported that “The Nigeria Employers’ Consultative Association (NECA), the umbrella body for employers in Nigeria, has disclosed that at least 15 multinationals have either divested or partially closed operations in the country in the last three years. The Director General of NECA warned that the consequences of the massive job losses across sectors would continue to create insecurity challenges and increase the occurrence of child labour, among others.”
The staff strength of these over fifteen companies was claimed to be over 20,000. Governments of developed countries help companies, especially multinationals, to remain in their countries. McDonald’s was able to grab 872 million pounds sterling (about 920 million USD) in UK government tax breaks and support during COVID-19 pandemic in 2020, including 229 million pounds sterling from the Coronavirus Job Retention Scheme, and 143 million pounds sterling from the “Eat Out to Help Out Scheme”. Tom Krisher, Corey Williams and Mike Householder of Associated Press reported, in “Thousands of auto workers on strike across Detroit’s 3 automakers”, September 15, 2023, that “if the strikes last a long time, dealers could run short of vehicles and prices could rise, impacting a U.S. economy already under strain from elevated inflation. The walkout, they said, could even be a factor in next year’s presidential election by testing Joe Biden’s proud claim to be the most union-friendly president in American history.” Companies close-down is not a good experience for political leaders.
Industries provide products, jobs, personal income tax and corporate tax. They are also the bedrock of service industries (tertiary sector) in any nation. It is disheartening, the way multinational companies are leaving Nigeria in droves. It shows that these companies are not resilient and have no alternative measures as solutions to the challenges facing them. The point is, though China is Mercedes-Benz cars largest market in terms of unit sales, surpassing Europe, it is unimaginable that the Mercedes-Benz Auto industry will exit Stuttgart, Germany and operate in Guangzhou, China. Mercedes-Benz, Volkswagen and Audi are three of the lasting and popular legacies of Germany as a nation. Thus there are more to manufacturing companies than making products, offering employment and providing incomes to stakeholders. Cadbury is a British multinational confectionery company owned by Mondelez International. It is the second largest confectionery brand in the world after Mars. Cadbury is headquartered in Uxbridge, London and operates in more than fifty countries worldwide. It is unimaginable that Cadbury will exit the United Kingdom.
Multinationals exit can create many challenges in any nation. Apart from the unemployment challenges that it can cause, it can also cause industrial and residential property vacancies, loss of income, loss of corporate and personal income taxes and scarcity of products being manufactured by the multinational companies. The ripple effects on the distributors, the consultants and the organisations that use the products of the multinationals as a raw materials or inputs in their process may be much. Products from an area also serve as advertisers of the area. For example, the blackish plantain products from Ikire, Osun State, are more popular than any other product from the area. The tie and dye (Adire) cloth materials are known for Abeokuta, Ogun State. Guinness has popularised Ireland more than any other product from Ireland. Any challenge that may be faced by the industry should be considered a “state challenge”. This is why governments try as much as possible to retain and protect multinationals which are major employers in their territory. Gboko, a region in Benue State, Nigeria, has recently regained its status after the commencement of Dangote Benue Cement Company.
The good news is that, as these multinationals are leaving the shores of Nigeria, they are creating opportunities for the local companies which are producing similar alternatives to increase and improve their production. They are also creating avenues for other new international multinationals to invest in the markets that they have left. The exit of Bellview Airlines and Virgin Atlantic created an opportunity for Air Peace to thrive in the same sector. Diageo considered Nigeria’s investment climate to be murky waters, but Tolaram Group thinks it is worthwhile to invest in the country! The local shareholders of Federal Palace Hotel, Tourist Company of Nigeria Plc, recently claimed the hotel lost all its equity and is in negative equity of N7.78 billion because of the loss of over N31.6 billion (about $20,276,007) in the last operation year but refused to fold up. This development where multinationals like Sun International of South Africa do not think of other ways of retaining their employees other than to relocate should be a cause for concern to the government of Nigeria. The government must look for ways of developing local investors to take up the management of the multinational companies through “buy-outs and safe jobs” schemes!
Incentives like tax holiday, subsidising importation of raw materials and ensuring the development of local raw materials are important in multinationals retention. No nation can survive by depending on importation for all the products required by its citizens. The country will become a dumping ground with the people not having jobs to engage them. In April 2024, McDonald’s announced it will purchase the franchise rights to 225 outlets in Israel as a result of Palestinians’ boycott. This is one of the effects of allowing multinationals to dominate the industrial sky of a nation. International politics may distort their operations. Government must therefore put in measures to develop the local industrialists by providing its wide shoulders for the local industrialists to rest their heads.
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