No respite in ‘Corporate Exodus’ from Nigeria’s business climate

A recent damning report by the Nigerian Economic Summit Group (NESG) that over seven million small businesses in Nigeria have shut down in the past two years is a cause for worry. This alarming trend, the NESG said, is attributed to the country’s economic downturn, which has been hallmarked by rising inflation, huge operational costs, and worsening economic uncertainty.
The NESG report at the presentation of its ‘2025 Private Sector Outlook’ in Lagos, also catalogued key economic headwinds, challenges, and opportunities for businesses navigating the evolving Nigerian economy under the President Bola Ahmed Tinubu-led administration. These emerging trends, the NESG said, underscored the country’s economic vulnerability, which has led to Nigeria losing an estimated N94 trillion to multinational divestments and business closures in barely two years.
“Between 2023 and 2024, multinational divestments and business closures led to an estimated N94 trillion loss. Additionally, 30 percent of Nigeria’s 24 million registered MSMEs shut down during this period, underscoring the country’s economic vulnerability,” the NESG said.
The exit of many companies, especially multinationals, from Nigeria in the past couple of years has been one of the hallmarks of the President Bola Ahmed Tinubu administration. These companies left in various guises, by either scaling down operations, transferring ownership or selling their (parent company) stakes to other local or foreign investors.
The ‘corporate exodus’ assumed a crescendo between 2023 and 2024, as reported by the NESG, when many blue chips that had operated in the country for several decades joined the bandwagon. Reasons widely adduced for their leaving in droves include: foreign exchange (FX) crisis, naira floatation (leading to massive devaluation), poor and decaying infrastructure, high energy costs, insecurity, and unstable government policies, among others.
Faced with these challenges, not a few multinational and local companies elected to close down their businesses. Some opted to significantly scale down; and yet others sold their (majority) interests to other local/foreign investors, just to flee the scorching Nigerian business climate.
Unfortunately, for those entities that have opted to ‘hang on’, the environment does not seem to have been improving. In this regard, the minister of power, Adebayo Adelabu said the other day in Abuja that “over 60 percent of manufacturing companies in Nigeria have been forced to exit the national grid due to unreliable power supply, and have resorted to self-generation of power which have driven production costs and made Nigerian goods uncompetitive.”
The minister, who made this disclosure during the presentation of a National Integrated Electricity Policy (NIEP) and the Integrated Resource Plan (IRP), said that “bringing back these manufacturing companies that left the national grid on board is the only way the government can drive the expected economic growth and development.”
Adelabu said: “Today, more than 60 percent of our manufacturing industry is completely off-grid. They engage in self-generation, not because they are in rural areas or they are in semi-urban areas, they are in locations where there is supposed to be access to electricity.” He concluded that the products of these companies can never be competitive because of the implicit high cost.
“The only way we can allow this to contribute to economic growth, industrialisation and national development,” the minister said “is to ensure that there is reliability in grid supply, so that all these companies that are currently off-grid can go back to the grid.” Adelabu said “this will reduce their cost of production, inflation, and our locally produced goods can now compete with imported goods.”
Unfortunately, these mere intentions are different from the reality: the national grid collapses several times every year, plunging the entire country into pitch darkness for days on end. In point of fact, the frequency of Nigeria’s national grid collapse has become a major disincentive to existing and potential investors as, according to the power minister, over 60 percent of existing manufacturing companies have opted to go off-grid.
Apparently in an effort to alleviate the plight of the manufacturers, the federal government had to come up with ‘Bands’ for energy users, under which policy most manufacturers came under ‘Band A.’ This initiative however translated to over 250 percent hike in electricity tariff. Under the policy, the Nigerian Electricity Regulatory Commission (NERC) increased electricity tariff for ‘Band A’ customers, from N66 per KW (kilowatt) to N225 per KW.
This has worsened the plight of not only the manufacturers but all businesses, as their costs of operation have gone through the roof. As some of them turn in their 2024 (financial) reports, they have only huge losses to show. For example, Dangote Group’s three listed companies (on the Nigerian Exchange, NGX) — Dangote Sugar Refinery, Dangote Cement and NASCON Allied Industries — reported a combined loss of N423.3 billion.
Although this huge loss is attributable to foreign exchange (FX) crisis and sundry other challenges, the distressful situation is a testament to the perilous times for all businesses in Nigeria. The MTN Group, on its part, reported a 70 percent drop in full-year (2024) earnings, due to the impact of Nigeria’s naira devaluation and other operational difficulties, including insecurity.
In its report, the Group said: “The financial downturn was largely due to Nigeria’s ongoing foreign exchange crisis, which has led to chronic dollar shortages and multiple currency devaluations.” MTN Nigeria, a key subsidiary of the Group, exhibited the impact of Nigeria’s economic turmoil, turning in a pre-tax loss surge of over 200 percent, to hit N550 billion (US$355.76 million).
Nigerian Breweries Plc reported a post-tax loss of N144.8 billion for the fiscal year 2024, a 36.3 percent increase compared to the previous year. This was despite a significant 80.8 percent revenue growth to N1.08 trillion. Again, the huge loss was attributed to FX losses due to naira devaluation and high borrowing costs — due to the ruling high interest rates in the economy.
A number of other multinationals and blue chips (all listed on the NGX) have similarly reported significant losses (in 2024) owing to the harsh operating environment in Nigeria. This underlines the fact that not a few of them are yet bent on exiting Nigeria; many are in fact undergoing the winding technicalities involved in the exit process.
This explains why the acquisition of Shell’s onshore assets by Renaissance Africa Energy Holdings which commenced over a year ago, was only concluded in March 2024. The $2.4 billion deal marked the end of Shell’s almost a century of operations in Nigeria onshore oil and gas.
By and large, it is the increasingly excruciating business environment of Nigeria that caused Shell and others to opt to leave a country where they operated for several decades. From all indications, the exodus is not yet abating, as many businesses keep perfecting the best schemes for their eventual exit. Is any respite in sight? I doubt it!