STEMMING THE EXIT OF MULTINATIONAL

CORPORATIONS

Kingsley Ndubueze Ayozie argues for an enabling business environment

Recently over the media came the emergence of headlines such as: “Microsoft is leaving the Nigerian market for her sister country-Kenya.” No doubt, there are insinuations from different quarters that in the next few years they may

also leave Kenya and head to another unknown destination. Ghana as it were, happens to be the Cinderella of foreign direct investment ( FDI) in the

whole of the West African sub -region. Not too long ago facts had it that foreign

businesses are leaving in droves from that country to other destinations too.

Standard Chartered Bank has left almost all the countries within the African

continent where they operated except for the Nigerian and South African market .

Ironically, Access Bank is buying over their assets in those other countries. Diageo is at the verge of leaving the Nigerian business environment and not Guinness the brand itself. They are leaving because they claim that doing business in Nigeria is almost impossible.

Like many multinationals before them, they now realise that their business model is outdated.

Also reported is the case of Shell that just sold its Nigerian operations to Aradel, a wholly

Nigerian company, to mention but a few.

We will all recall that on June 11th, 2024 ; the African business environment

woke up to read the widespread report of a popular multinational corporation Guinness

by name wanting to leave the Nigerian business environment in the near future as facts

have it that they have existed for a period close to seventy five years within the Nigerian

market. Guinness was incorporated sometimes around April 29th

1950 as a trading company that imported stout from Dublin into the Nigerian market .

As announced by Guinness management, they stated that they will exit their host African

country’s market and sell off its controlling shares to Singaporean conglomerate

Tolaram Group sometime soon.

Further report have it that Guinness will be joining a long list of other multinationals

such as Glaxo-SmithKline and Microsoft that have left the continent of Africa within the

last one to two years to other continents citing harsh economic climate alongside their

issue of difficult business environmental which is making their businesses to be

unprofitable as the principal reason for their exit.

Apart from the issue of difficult business environment which is at the center of it all ,

the other reasons that could trigger the exit of multinationals from market within the

African shores to other continents like Europe , Middle East or Latin America may

include but not limited to the issue of repeated operating losses which certainly will

impact their financial performance; diminishing profitability; changes in customer’s 

tastes and preferences which may decline the sales volume; influx of new technologies 

that may render exiting ones totally obsolete.Take for instance the issue of email 

pushing out letter writing and mobile technology edging out local communication market . 

The incidence of brain drain is also adjudged to be another reason as most young African 

are emigrating day- in- day out from the African continent to the other continents. The 

incidence of high labour turnover and/ or shortage of requisite manpower that may be 

attributable to incompetence is another worrisome factor that contributes greatly to business relocation within our continent .The incidence of unnecessary demands by employees is also not to be overlooked; lack of access to capital meant for 

business expansion, growth and development is also a contributory factor to the issue of 

business relocation within our region. Another worrisome factor is the difficulty in 

accessing raw materials needed for production or manufacturing as the case maybe, 

harassment and intimidation by trade union organisations can in any case dampen the 

morale of the workforce within the African business environment. Finally 

the issue of unfriendly government policies that may hinder the ease of doing business 

or creating some form of hitches to the business enabling environment is also not to be 

neglected.

The mass exodus of multinational corporations from the African continent to other 

parts if not urgently arrested may certainly lead to serious economic crisis such as : 

increase in job losses, thus increasing the bar of unemployment within the land. In 

addition, the job losses may lead to high poverty rate which we have been thriving to 

curb all these years . Furtherance to the above is the incidence of high unemployment 

level that may further trigger an increase in social vices such as drug abuse, robbery 

incidence and internet fraud, and the likes. 

It addition this challenge may further lead to a reduction in our Gross Domestic Product 

(GDP ). No doubt, losses in a nation’s revenue drive by way of taxes and levies (such as CIT, ET, & PAYE etc) which ordinarily these multinationals would have remitted to the government 

purse certainly may put the nation into financial burden or crisis.

It is interesting to note that there is the existence of so many measures that can be 

employed in order to arrest this ugly trend of massive relocation of multinationals and 

notable among such is the issue of a business enabling environment. One may wish to 

ask, what does an enabling business environment entail? An enabling business environment which is also known as business enabling 

environment (BEE) consists of the totality of norms, customs, policies, laws, regulations, legislations, trade agreements (local and international) and above all, public infrastructure that either promote or prohibit the free flow of goods and services in 

conjunction with its attendant value added to a nation. Permit me to state that an enabling business environment could either be formal or 

informal. Formal encompasses public policies, governance structure, regulatory framework and

investment programs whereas informal may primarily focus on mere conducive

atmosphere (wikipedia).

Before I proceed further, I wish to highlight some of the reported giant strides made thus far in this regard by the collective heads of African Government and/or those ones made by the individual Heads of Government as the case maybe. Worthy of mentioning is the African Continental Free Trade Area ( AfCFTA) that was

established sometimes in 2018 but had to commence operation fully on January 1, 2021

due to the negative impact of the dreaded COVID-19 pandemic that ravaged the world

economy some couple of years back. No doubt some of the attendant benefits that

AfCFTA promises to give us include the betterment of macroeconomic indices,

fostering of economic growth, provision of trade amd investment opportunities, generation

of massive employment opportunities for the bulk of the unemployed youths within the

African sub-region, and more importantly reducing poverty drastically amongst the

African populace.

Driving it home the former President Muhammadu Buhari

sometimes in 2016 established and inaugurated the Presidential Enabling Business

Environment Council (PEBEC) which is a specialized agency of the government that was

saddled with the sole responsibility of addressing all manner of issues pertaining to the

Nigerian business environment.

The PEBEC as an agency was designed to be headed by the office of the Vice President of

the Federal Republic of Nigeria. The agency was given a dual mandate to make

Nigeria a progressively easier place to do business by removing all forms of bottlenecks

or bureaucratic constraints to doing business in Nigeria as well as also improving the

perception of investors and stakeholders about the Nigerian business terrain.

The remarkable efforts of the incumbent administration ably led by President Ahmed Bola Tinubu in addressing the various bottlenecks in

our national tax system and collection processes can not be ignored . This administration

has taken a bold step by the establishment and inauguration of the Presidential Fiscal

Policy and Tax Reform Committee (PFPTRC) which is being chaired by Mr Taiwo Oyedele. The committee amongst other things has recommended for the full

harmonization of the numerous levies and taxes numbering well above 60 at the

moment. Their objective is geared towards the reduction of these taxes to about eight

thereby promoting the much talked about ease of doing business.

In spite of the giants strides recorded by virtue of the establishment of AfCFTA, PEBEC

and the current proposed taxation harmonization issue, a lot is still required from all of

us collectively in other to make the African continent a safe haven when it comes to

business investment.

Our expectations on an ideal enabling business environment will center primarily on the

following areas: The institutioning of a stable political climate that can affect businesses

positively ( ie political environment); having a stable interest rate, inflation rate and above

all foreign exchange rate ( ie economic environment); guaranteeing that our norms ,

values and belief systems will accommodate a friendly business environment (ie socio-cultural environment); supporting greatly innovations and inventions that will aid the

business operations (ie technological environment); protecting the environment from

any form of degradation or unwholesome collapse due to flooding or deforestation and

the likes ( ie ecological environment); and finally enacting laws, regulations, legislations

that will support the growth and sustainability of businesses ( ie legal environment).

The bone of contention is that we need our homegrown remedial actions to deal

decisively with our own peculiar socio-economic challenges both in Nigeria in particular

and Africa at large in other to attract and retain business ventures (multinations and

indigenous alike).

 The government is doing their utmost best to attract and at the same time retain these businesses though a lot still needs to

be done in the area of the provision of stable power supply, providing accessible road

network, guaranteeing maximum security in the land that will foster a peaceful business

environment, ensuring political stability in the land that will boost investors level of

confidence, and above all a favourable business climate that will improve the perception

of investors’ and stakeholders about the Nigerian business terrain.

 Ayozie, FCTI, FCA, Public

Affairs Analyst and Chartered Accountant, writes from Lagos