Several global corporations have left Nigeria due to its difficult economic climate, although some businesses are still growing and making investments there. A $20 billion crude oil refinery with a daily capacity of 650,000 barrels of oil refined is one of them, built by the Dangote Group in Lekki, Lagos. To increase its Manufacturing capacity both locally and throughout Africa, Dangote has collaborated with China Sinoma International Engineering to construct a cement facility in Ogun State. With 100% local cocoa procurement and 100,000 Farmer training, Nestle Nigeria has grown its activities.
To create 400 metric tonnes of active pharmaceutical ingredients a year, Emzor Pharmaceutical is constructing a $23 million facility. Eraskorp Nigeria Limited is building a $50 million lubricant blending factory in Bayelsa State, while BUA Cement has increased its capacity with a new cement plant, reaching 8 million tons annually. Economists such as Uchenna Uzo and Muda Yusuf emphasized that these companies deliberately grew in spite of economic challenges, such as the depreciation of the naira, by preparing for the worst-case situation.
767 businesses closed in 2023, according to MAN.
The long-term market potential in Nigeria and the Export opportunities arising from the depreciating currency are the driving forces for this resiliency. As a result of multiple foreign corporations leaving Nigeria in recent years, the country has lost ₦94 trillion. Also, as a result of growing inflation, high borrowing rates, and volatile exchange rates, 767 businesses closed in 2023, according to the Manufacturers Association of Nigeria (MAN). Many large international corporations have left Nigeria in recent years as a result of the challenging economic environment.
A number of businesses, including ShopRite, Mr. Price, and Puma, have ceased operations in Nigeria due to economic difficulties, which include high operational expenses, inflation, and regulatory obstacles. A study by the Lagos Chamber of Commerce and Industry estimates that the Nigerian Economy has lost ₦94 trillion as a result of these exits. Concurrently, 767 manufacturing enterprises closed their doors in 2023, and 365 others experienced severe financial difficulties, mostly as a result of high interest rates, inflation, and fluctuating exchange rates. However, businesses like Emzor Pharmaceutical, BUA Cement, Nestle Nigeria, Dangote Group, and BUA Cement are still growing.
Workers in the manufacturing sector have experienced job losses.
One of the biggest private investments in Africa is Dangote’s new $20 billion refinery in Lekki, Lagos, which is anticipated to provide thousands of employment. The growth of BUA Cement in Sokoto and Edo States has already increased its production capacity to 8 million tons yearly, greatly enhancing local employment opportunities. The working climate for firms has gotten worse, according to economists, as a result of high interest rates that are higher than 18% and an Inflation rate that hit over 24% in mid-2023.
While international corporations have departed, local businesses are leveraging the opportunity offered by the weakening naira, particularly for exports, according to Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise. Though they emphasize that efforts are being made to create a more favourable business climate, government authorities have acknowledged the challenging situation. Reducing regulatory obstacles has been one strategy The Central Bank of Nigeria (CBN) has employed to stabilize the value of the Naira and to draw in more foreign direct Investment (FDI). Workers in the manufacturing sector, in particular, have experienced job losses and financial hardship in the areas where businesses have closed.
Related Article: High Multinational Firms Exit Raises Concern
An example is the loss of over 3,000 employment caused by ShopRite’s withdrawal from Nigeria, which affected not only the employees but also the families and local communities that depended on those jobs. On the other hand, local economies are booming in areas where expansion projects are being implemented. The Dangote Refinery in Lekki has improved the local economy, increased business prospects, and produced thousands of direct and indirect jobs. Likewise, the growth of Emzor Pharmaceutical in Ogun State is anticipated to fortify the regional pharmaceutical supply chain and augment employment prospects inside the area.