By William Emmanuel Ukpoju
The New York Times recently described Nigeria’s economy as “struggling to diversify” and “hampered by corruption and mismanagement.” The newspaper noted that the country’s reliance on oil exports has made it vulnerable to fluctuations in global oil prices and that the government’s efforts to diversify the economy have been slow to bear fruit. Without bias or aspersion, Nigeria, a former African economic giant, faces an unprecedented crisis as multinational companies flee the country in droves.
The mass exodus, which has resulted in a staggering loss of N95 trillion (approximately $250 billion) to the nation’s economy, has sent shockwaves throughout the country and raised concerns about the future of Nigeria’s economic stability. The departure of these multinational companies is a stark reminder of the country’s failure to address its longstanding economic woes. Nigeria’s financial instability, characterized by fluctuating exchange rates, inflation, and a heavy reliance on oil exports, has created an unfavourable business environment.
The country’s deteriorating infrastructure, including power and transportation challenges, has increased operational costs for businesses, making it difficult to sustain operations. Corruption and regulatory hurdles have also been cited as major obstacles for foreign investors. The country’s ranking in the World Bank’s Ease of Doing Business index has consistently been low, making it an unattractive destination for investment.
Nigeria has moved up 15 places to rank 131st globally and 34th in Africa, up from 146th and 54th respectively in the previous year. The World Bank report highlights some level of improvements in starting a business, where Nigeria now ranks 105th, and dealing with construction permits, where it has jumped to 55th place. However, challenges persist in getting electricity and registering property, with rankings of 169th and 183rd respectively.
The lack of a clear and consistent economic policy has further worsened the problem, leaving investors unsure of the country’s direction. Nigerians are worried and as the economic hardship continues to bite harder, the elites have also lent their voices to the matter.
In a recent tweet, the 2023 Presidential flag bearer of the Labour Party, Mr. Peter Obi, expressed worry about the continuous exit of multinational companies from Nigeria. “I am compelled to address the alarming exodus of multinational companies from Nigeria, which has cost our nation a staggering N95 trillion in the past five years. According to The New Telegraph, in the last year alone, over ten multinational giants such as GlaxoSmithKline, Equinor, Sanofi-Aventis, Bolt Food, Procter & Gamble, Jumia Food, PZ Cussons, and Kimberly-Clark, Diageo and others, have exited Nigeria, citing eerily consistent reasons. “According to The Punch, “Multinational firms exit Nigeria over harsh business climate.” The Guardian reports, “Insecurity, high energy costs force companies to leave Nigeria.” The Nation states, “Poor business environment, inconsistent policies drive companies out of Nigeria.” “These companies have highlighted the same problems across the board. It is clear these issues are not coincidental but symptomatic of a larger governance problem. Why are we not facing and solving these problems head-on?” Obi tweeted. The impact of this exodus is far-reaching, with consequences felt across various sectors. The loss of foreign investment has led to a decline in economic growth, resulting in reduced job opportunities and increased poverty levels. The departure of multinational companies has also led to a decline in tax revenues, further straining the country’s already struggling economy.
While Nigerians continue to wallow amidst the skirmish to make ends meet, critics argue that the government’s response has been inadequate, with few concrete steps taken to address the underlying issues driving the mass departure of multinational companies. In response, President Bola Ahmed Tinubu, through his special adviser, Bayo Onanuga, stated that the president inherited a severely weakened economy but he is resolutely tackling the nation’s economic challenges. Onanuga argued that the New York Times article about Nigeria’s economy was biased and focused solely on the negative aspects of the nation’s economy, ignoring the current positive strides and reforms being carried out by the Tinubu-led administration. Onanuga stated that the president’s decisions to end fuel subsidies and unify exchange rates are necessary steps to address economic distortions and restore fiscal discipline.
However, media reports indicate that economic experts have weighed in on the president’s economic policies, with some questioning his economic reform policies while some are praising his efforts to address the country’s economic challenges.
Dr. Idayat Hassan, a prominent economist, noted that the president’s decision to unify exchange rates was a “step in the right direction” but warned that floating the naira could lead to inflation and worsen the economic crisis. Dr. Bongo Adi, a professor of economics, believes that floating the naira would lead to a “currency crisis” and aggravate the country’s economic woes.
Speaking to Valuechain during the just concluded Africa Gas Innovation Summit, (Prof) Joseph Ezigbo, Founder/Managing Director, Falcon Corporation Limited, lamented about the economic turbulence currently facing Nigeria, especially concerning the ease of doing business. According to Ezigbo, “Our major problem as a nation is the fact that when we start looking for solutions to our challenges, we don’t look at the root causes. “As a nation, we cannot produce, innovate, or produce anything in this country that can see the light of day because the cost of doing business is too high. Why is the cost too high? I remember in the early 80s I could take my naira and go to London and spend it on the streets of London because the exchange rate was very good. Today one pound is almost 2000 plus; this is a disgrace, a shame to our nation. “What can we do?
First and foremost, our government needs to ensure that the CBN becomes reactive, the CBN need to become responsive, and then find out what’s the best way to stabilise the naira. If they cannot do that, then we’re back to square one. I see this summit as a centre to galvanize us into a position where we can begin to say, enough is enough”, Ezigbo said.
Amidst this brouhaha, one Nigerian who has ceaselessly faulted the economic policies of the Tinubu administration is the former Vice President and the 2023 Presidential flag bearer of the People’s Democratic Party (PDP), Alhaji Atiku Abubakar, Wazirin Adamawa. Atiku has come out to say that the government’s declaration that the petroleum subsidy is no more in place is false. In a statement, the former Vice President asserted that the subsidy is still in place, contradicting recent government declarations.
Atiku argued that the government’s stance is “false” and “misleading,” stating that the subsidy continues to burden the Nigerian economy. He called for transparency and honesty in the management of the country’s resources.
Tinubu had earlier in May last year, announced the removal of the subsidy as part of efforts to reform the petroleum sector and reduce the financial burden on the state. However, Atiku’s statement has sparked a new debate on the issue, with many calling for clarification and accountability. This development comes as the country grapples with rising fuel prices and economic uncertainty. The controversy has sparked reactions from various stakeholders and Nigerians alike. Atiku’s comments come as the debate over subsidy removal continues to intensify, with many Nigerians expressing concerns about the impact on their livelihoods and the economy. His intervention adds a prominent voice to the discussion, highlighting the need for a more robust and people-centred approach to economic reform.
For Nigeria to succeed, government and policymakers at all levels must come clean and ensure that the right policies are deliberately formulated and put in place to drive the economy to recovery so that the “Poor will breathe” and enjoy the dividends of democracy.
To reverse the current economic trend, the government must take urgent action to address pressing economic challenges. This includes diversifying the economy, investing in infrastructure, and implementing policies to attract foreign investment. The government must also take concrete steps to address corruption and regulatory hurdles, creating a more favourable business environment. For Mr. Peter Obi, “The responsibility lies with our leadership, those we put in charge to urgently address these challenges.
Tackling these issues requires creating a business-friendly environment that fosters investment, innovation, and growth. This includes prioritizing security, stabilizing our policies, and reducing energy costs. We must also cultivate a culture of transparency, accountability, and good governance. We can build an economy that benefits all Nigerians, not just a privileged few.“ Let us unite to transform Nigeria into a nation conducive to business, attractive to investment, safe and prosperous for all citizens. Together, we can make Nigeria a beacon of hope and progress in Africa and the world.”
The multinational exodus from Nigeria is a wake-up call for the government and policy formulators. There is a need to take swift and decisive action to address the underlying issues driving this exit or risk irrevocable loss to Nigeria’s economic stability and growth. The future of Nigeria’s economic sustainability depends on it and the time to act is now.