It has been reported that with the departure of US and European multinational corporations from Nigeria, Asian and local companies are now taking their place to cater to the market demands. The presence of a large population in Nigeria, which could potentially create a huge consumer market for goods, is overshadowed by significant economic challenges. Issues such as high Inflation rates, declining currency value, widespread insecurity, and frequent Electricity shortages have caused US and European multinational companies to exit the country.
Nevertheless, in light of the departure of these multinationals from Nigeria, Asian and domestic businesses are now making a move to occupy the space that has been left behind. Diageo Plc recently finalized the sale of its majority ownership in Guinness Nigeria Plc to Tolaram Group, based in Singapore. As a result, the local company Fouani Group has taken over operations of a facility that manufactures diapers and sanitary pads, situated alongside a complex owned by Procter & Gamble, a company headquartered in Cincinnati.
Tinubu has implemented measures like ending fuel subsidies to revive the economy.
In the wake of GSK’s exit, Fidson Healthcare has stepped in to fill the gap by diversifying its product offerings and venturing into international markets for sales. President Bola Tinubu has implemented a variety of measures, such as ending Fuel Subsidies and decreasing the value of currency, in an effort to increase government income and rejuvenate the struggling Economy since assuming office. Nevertheless, the economy is bleeding due to the implementation issues of these policies, which have been widely condemned.
More so, in the past few months, the value of the Naira has been extremely unstable, experiencing a steep decline of 56% against the dollar within the last year, surpassing all other African currencies in terms of depreciation. As a result of depending on imported goods, raw materials, or equipment, companies are faced with increased expenses, leading to a reduction in their profit margins. It was reported that despite the difficulties faced in the Nigerian consumer market, Hayat and Tolaram have excelled in establishing their brands as popular choices among consumers.
Local & int’l businesses are turning towards procuring raw materials in Nig.
The exits of other companies highlight the tough nature of the market, but also showcase the achievements of these two firms in adapting to local conditions. Both local and international businesses are now turning towards procuring raw materials within Nigeria and conducting their Manufacturing operations in the country. This strategy helps them circumvent the currency risks that have been causing some foreign companies to retreat from the market.
Thus, in order to succeed in places like Indonesia, where conditions can be difficult, companies like Tolaram have found that the most effective strategy is to minimize expenses by adapting to local resources. By implementing this approach, Indomie instant noodles have successfully become one of the most favoured brands in Nigeria, leading to partnerships with Kellanova, a US-based company specializing in cereal and snacks, as well as Arla Foods, a prominent dairy company from Denmark. In Nigeria, Tolaram runs 24 plants that are fully integrated backwards, handling everything from the production of raw materials to the establishment of their own oil palm plantations.
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On the other hand, GSK opted to import their products. Local companies in Nigeria are indeed encountering obstacles despite efforts to boost the economy by President Bola Tinubu. The exit of major corporations like Kimberly-Clark Corp., Bayer AG and Sanofi SA, is hindering progress in revitalizing the economy. Girish Sharma, an executive director at Tolaram, highlighted the silver lining in difficult situations by acknowledging that challenging environments also offer opportunities. He expressed the company’s strong faith in Nigeria’s promising future.