The Guinness metaphor for corporate exodus from Nigeria

Marcel Okeke, a practising economist and consultant in Business Strategy & Sustainability based in Lagos, is a former Chief Economist at Zenith Bank Plc. He can be reached at: obioraokeke2000@yahoo.com; +2348033075697 (text only)

The media — print, electronic and social — during the first two weeks of this month (March 2022), were awash with the ‘news’, denials and clarifications about the purported exit of a ‘corporate giant’ and one of Nigeria’s blue chips — Guinness Nigeria Plc — to a more ‘business-friendly’ climate in neighbouring Ghana. Out of the blue, an ‘advert’ appeared in the media — under the rubric: “Guinness Brewery Ikeja Land and Properties for Sale”— with a price tag of ‘Eight Billion Naira’; and like wildfire, the ‘advert’ spread fast and very widely. Ironically, the ‘advert’ content was couched in such language and details that almost obliterated every iota of doubt about the ‘sales deal’. Apart from the price tag, size, location, ‘reason for sale’, details of the factory (including land size) were clearly given, including ‘details of development on the site’.

However, as the ‘news’ kept spreading, the managing director, Guinness Nigeria Plc, Mr. Baker Magunda, denied it, and issued a statement in which he restated the “company’s commitment to remaining in the country and delivering value to its stakeholders and consumers.” Although this statement looks very reassuring to the Nigerian public, the concern and fear generated by the ‘advertised’ relocation of the brewery is still hanging ‘thick’ in the air. This mindset is founded on the not-so-pleasant experience of Nigerians in the past two to three decades, when massive ‘de-industrialization’ or high level of ‘corporate mortality’ had been the lot of the country’s business landscape.

According to a Premium Times report of September 11, 2012, at least eight hundred companies closed shops in Nigeria between 2009 and 2011, “due to harsh operating environment.” Quoting the then President, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Herbert Ajayi, the paper said “the companies that have survived are also having serious challenges as more than half of them have been classified as ailing.” The NACCIMA boss who spoke at a workshop on economic diversification organised by the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) blamed the continued decline in the manufacturing sector on “political and economic factors,” citing poor infrastructure and epileptic power supply as key impediments to the industry.

Mr. Ajayi’s cry and lamentation took place about a decade ago; yet, in 2018, the Kano Branch of the Manufacturers Association of Nigeria (MAN) reported that 232 manufacturing plants out of the existing 338 in three industrial estates in the Kano State closed down between 1994 and 2018. In March, 2019, GlaxoSmitheKline (GSK) Consumer Nigeria Plc announced plans to shut down its production facility in Agbara, Ogun State, later in 2021. This, it has since done; and handed over production of its consumer health products, medicines and vaccines to local contract manufacturers. Similarly, Procter & Gamble (P & G) Nigeria in 2018 announced plans to shut down its $4300 million plant also in Agbara, Ogun State, “due to high cost of importing raw materials and unfriendly government regulations and policies. P & G has also gone ahead to divest from Vicks Lemon Plus plant in Ibadan, Oyo State. And the divestment and corporate exodus from Nigeria goes on ad infinitum.

In the oil and gas sector, the exodus of many big players and their relocation to a more clement business environment have become a threat to the economy of this largely oil-dependent country. The international oil companies (IOCs) have in recent times been divesting from Nigeria in droves, as part of the ongoing ‘energy transition’ to cleaner and renewable energy globally. From Royal Dutch Shell (SPDC) to Exxon Mobil, Chevron and Agip: all are leaving Nigeria (in one guise or another) to more enabling climes. The local oil companies (LOCs) that are acquiring some of the assets of the IOCs who are exiting have all along been marginal operators who have neither the fiscal nor technical capacity. This trend is already diminishing Nigeria’s status and stature in the global hydrocarbon business arena. As a key member of the Organisation of Petroleum Exporting Countries (OPEC), Nigeria gets its crude oil production/export quota adjusted from time to time. Unfortunately, at a time oil producing nations are reaping a windfall from oil sales owing to the ongoing Russia-Ukraine war, Nigeria cannot improve its production nor meet its allocated quota.

In the textile sector, the terrain is laden with ‘corporate carcasses’ of once big and profitable players. According to the Nigerian Textile Manufacturers’ Association (NTMA), these once-key-players have since ceased to exist: Afprint Nigeria Plc; President Industries Ltd; Aswani Industries Nigeria Ltd; United Nigeria Textile Ltd; Arewa Textiles; Kaduna Textiles Ltd. Others have also since closed down due to the inclement business environment; these include Nigeria Synthetic Fabrics Ltd; First Spinner Plc; Unitex Ltd; Textile Printers Ltd; Asaba Textile Mills; Aba Textile Mills Ltd; Edo Textile Mills Ltd; among many others.

This very high ‘corporate mortality’ rate is also very evident in other sectors, especially the automobile — where about six of Nigeria’s auto assembly plants have either packed up or remained moribund. They include Peugeot Automobile Nigeria Ltd; Volkswagen of Nigeria Ltd; Anambra Motor Manufacturing Ltd; Steyr Nigeria Ltd; Leyland Nigeria Ltd; National Trucks Manufacturers; and Fiat Production, etc. This woeful story is the same in the aviation sector where dead airlines and disused and abandoned aeroplanes belonging to them dot practically every available space in most airports across the country.

At a point in the 1980s to early 1990s, there were close to thirty cocoa processing factories in Lagos and other Southwest states of Nigeria; but today not up to five of them are thriving. The few around are almost moribund, operating at abysmally low capacity. Once upon a time, there were also Michelin and Dunlop tyre manufacturing companies in Nigeria. Both companies have since departed the shores of Nigeria. Where is the Nigerian Newsprint Manufacturing Company Limited, Oku-Iboku, Akwa Ibom State? Where is the Nigerian National Paper Manufacturing Company Limited, Ogun State? Where are the steel rolling mills at Oshogbo, Jos, Kaduna, Aladja (Delta State)? Where are the battery manufacturing giants: Berec Batteries and Exide Batteries? And the list goes on!

The demise of these once vibrant/thriving businesses or their exit from Nigeria was majorly a function of the business climate. And embedded in this are abysmally poor infrastructure (epileptic power supply, bad roads, lack of good and reliable water supply, duplicity of taxes, etc.); policy inconsistency; lingering insecurity of life and property, among others. So, all said, although the management of Guinness Nigeria Plc has denied the ‘rumoured’ exit of the blue chip from Nigeria, if (and when) it eventually happens, not too many watchers and players in the Nigerian economy will be surprised. As shown above, many companies like Guinness, have folded up or left Nigeria, in spite of their best efforts.