The response of the Federal Government, through Mr. Bayo Onanuga, to the information shared by Akinwunmi Adesina, President of Africa Development Bank (AfBD), to the effect that Adesina’s assertion that Nigeria’s GDP was better in the 1960s than it is today, comes across as a classic in sophistry. Government position comes against World Bank position that 75. 5 percent of Nigeria’s poverty index is domiciled in the rural areas, and also, against its earlier position that 3.6 percent of Nigeria’s population will become poorer in 2027. Government’s bragging position compelled a further inquisition into the state of Nigeria’s economy. The reality questions government’s gragra.
For instance, between 2015 and 2019, the manufacturing sector lost over 50 companies which shut down across the country. These closures, as captured in several media reports, were attributed to foreign exchange scarcity, high energy costs, and naira devaluation. A visit to the Manufacturing Association of Nigeria (MAN) will either confirm or fault this. Besides MAN, Nigerian Investment Promotion Commission (NIPC) reported that over 50 multinational and local enterprises shut down or relocated between 2015 and 2022. Notable among these were DealDey, an e-commerce business founded 2011 but shut down in January 2019. It cited logistical challenges for its decision. Western Metal Products Company (WEMPCO) founded 1954; also shut many of its factories by 2018 due to low patronage and competition from smuggled substandard steel. Malar-XT, a pharmaceutical company is recorded to have closed shop in 2017 due to rising production costs and bank debts from facility upgrades. Louis Carter Industries also closed shop due to high production cost and foreign exchange crunch.
According to Vincent Nwani, a former Director of Research at the Lagos Chamber of Commerce and Industry (LCCI), over 10 companies shut down in 2020. These include Standard Biscuits Nigeria Ltd., NASCO Fiber Product Ltd., Union Trading Company Nigeria PLC, Deli Foods Nigeria Ltd., and ShopRite Nigeria, which sold its Nigerian operations to local investors led by Persianas Investment in June 2021, after 16 years, citing an unfavourable operating environment.
Also, Mr Price Group Ltd., closed operations in June 2020 after failing to achieve scale. Tower Aluminium Nigeria PLC founded 1959, also closed shop and was taken over by African Foundries. Glax0SmithKline Nigeria shut down its drug production plant in 2021. Others listed as having closed shop are Framan Industries Ltd., Stone Industries Ltd., Mufex Nigeria Company Ltd., and Surest Foam Ltd.
The following year, 2022, Universal Rubber Company Ltd., Mother’s Pride Ventures Ltd., Errand Products Nigeria Ltd., Gorgeous Metal Makers Ltd., and Game Discount World Limited closed shop. In fact, Game exited in December 2022 after it sold its assets through a stock clearance sale. The trend continued in 2023 as Unilever Nigeria PLC stopped the production of home and skincare brands like OMO, Sunlight and Lux in order to cut costs. It eventually leased out its factory. However, it did not fully exit Nigeria but shifted focus to foods, beauty and wellbeing products. But, Procter & Gamble Nigeria, a consumer goods giant, dissolved on-ground operations in December 2023 and transitioned to an import-only model after a $300 million plant at Agbara shut down due to economic issues.
After more than one year of shutting its drug production plant in Nigeria, GlaxoSmithKline Consumer Nigeria Ltd., quit Nigeria in August 2023, and adopted a third-party distribution model. It blamed foreign exchange scarcity and high operational costs. ShopRite Nigeria closed its Kano branch in January 2024, after earlier divestitures, while Sanofi-Aventis Nigeria Ltd., a pharmaceutical company, opted for a third-party distribution model in February 2024, effectively exiting direct operations. Equinor Nigeria, an energy company that had operated for over 30 years, sold its business, including a stake in the Agbami Oil Field, to Chappal Energies in November 2023, and bid Nigeria bye.
Also, upcoming food delivery businesses, Bolt Food and Jumia Food Nigeria, packed their pots and stoves and took a walk in December 2023. Bolt Food cited efficiency, while Jumia Food said it rather focused on physical goods merchandising. Before them, Mayor Biscuits Company Limited (MABISCO) had in October, taken a walk from Nigeria’s business environment when it shut down its Agbara plant.
Between January and October of 2024, Microsoft Nigeria closed its Africa Development Centre in Lagos in May 2024; PZ Cussons Nigeria PLC, a consumer goods company that has been around for 126 years, announced a strategic review in which it considered exiting Africa due to naira devaluation and a 48 percent sales plunge, while Kimberly-Clark Nigeria, another consumer goods company, shut its Lagos manufacturing facility. Diageo PLC also sold its 58.02% stake in Guinness Nigeria to Tolaram Group in June 2024, while Pick n Pay, a retail chain, bid Nigeria good bye by selling its 51% stake in a joint venture in October 2024.
The Nigerian Economic Summit Group (NESG) reported that 7.2 million micro, small, and medium enterprises (MSMEs), that is about 30% of Nigeria’s 24 million registered MSMEs, shut down between 2023 and 2024 due to harsh economic conditions, including inflation, forex volatility, and policy challenges.
An analysis of this negative trend, gleaned from MAN, indicates that the manufacturing sector was the hardest hit, with 767 closures and 335 distressed firms by 2023 while the textile sector witnessed 38 closures between 1999 and 2009. A Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) report stated that 800 companies closed shop in Nigeria between 2009 and 2011 due to a harsh operating environment. More than half of the surviving firms were classified as “ailing,” with capacity utilization averaging between 30 and 45%.
Reasons adduced for these include foreign exchange scarcity, high energy costs, unsold inventory, low consumer spending, high operational costs, currency volatility, high import costs, and naira devaluation which increased import costs and eroded profitability. High Inflation, which reduced consumer purchasing power, also got the blame as well as poor Infrastructure including unreliable power supply which forced reliance on costly generators and fuel alongside bad roads which was responsible for increased logistics costs. Insecurity and corruption also shared the blame with several companies paying huge ransoms to free kidnapped staff.
All these translate to job losses, poor purchasing power, poor income and corporate tax returns, low mobility and eventually, negative economic growth. They are made worse by the removal of the subsidy on petrol that has driven more Nigerians into poverty, which government rice palliative bazaar failed to cure. It will be worsened by the proposal to further remove the subsidy on power, which has already been priced out of the purchasing power of the people, including the Presidential Villa, which finds its energy bill too high that it now has to spend N10b on solar mini-grid. However, I may be a novice on economic growth or decline indicators. Therefore, I will like that someone educates my ignorance on how these closures translate to economic growth.