- GlaxoSmithKline exit spells huge job loss in Nigeria
- NACCIMA president, other experts express worry over the development,
- Obi says these are consequences of poor management of Nigerian economy
This is certainly not the best of time for foreign companies in Nigeria as many of them have continue to record huge losses and face harsh economic policies made by the Federal Government.
Many of these companies which have stayed more than four decades in the country have suffocated by harsh business environment currently perverting the business environment in Nigeria.
However, recently, following this harsh business environment, GlaxoSmithKline Consumer Nigeria Plc made an announcement to shut down its operations in the Nigeria.
It was revealed that some other multinationals were substituting foreign for local resources, as they explored survival strategies to remain in business.
GlaxoSmithKline, GSK for short is a UK company that has been into research that developed and manufactured innovative pharmaceutical medicines, vaccines and consumer healthcare products in Nigeria for decades.
GlaxoSmithKline was incorporated in Nigeria in June 1971 and commenced business the following year.
However, unable to continue to absorb the business and shock in Nigeria, the company announced recently that its parent company, GSK Plc UK, revealed its intention to cease commercialization of its prescription medicines and vaccines through its Nigerian subsidiary.
Analysts express fear that with the closure of GSK, there is danger that many more multinational companies may be leaving the shores of Nigeria in recent time.
Recall that in March, Unilever Nigeria, said it would be prioritizing, “business continuity measures that reduce exposure to devaluation and currency liquidity,” after announcing a planned end to the production of its popular brands, including Omo, Sunlight and Lux.
However, many factors are hugely responsible for this ugly economic trend in Nigeria. The naira value had maintained a steady fall to the dollar, after the Central Bank of Nigeria announced the free flow of the exchange rates in the country in June 2023.
Apart from this free fall of naira with its attendant scarcity, these multinationals, had also continued to decry their inability to repatriate their monies back to their countries.
Experts, analysts express concerns over the exit
In a swift reaction to the planned exit of GSK, the Association of Community Pharmacists of Nigeria has expressed displeasure at GSK’s exit announcement.
In an interview with newsmen recently the National Chairman, ACPN, Adewale Oladigbolu, feared other multinational companies may exit Nigeria if care was not taken.
According to Oladigbolu, “GSK’s departure is a minus for the pharmaceutical
industry because most pharmacies in Nigeria have one thing or the other to do with GSK.
“So, shutting its operations in Nigeria is not a good signal for the pharmaceutical industry in Nigeria.
“The company that is likely to take over their branch will not be as scientific as GSK because there are the commercial and the scientific aspects to the pharmaceuticals.”
Also reacting to the development in a tweet on Friday, August 4, the Labour Party Presidential candidate, Mr. Peter Obi said that the company’s reason for leaving Nigeria is even more disheartening as they no longer perceive a prospect for the country as a business environment that would be anchored on productivity.
According to Mr. Obi, these could be seen as some of the consequences of the cumulative poor management of Nigerian economy.
In his words, “as a result, millions are losing their jobs and our poverty index is worsening, even though we’re already being perceived as the world’s poverty capital.”
He further wrote, “The multinationals that are leaving our country have not only created jobs but have created immeasurable training that contributed immensely to our human capital development over the years.
“Now they are leaving our shores one after the other. GSK which has a manufacturing facility in Agbara, Ogun State on over 25 hectares of land had directly employed over 400 highly technical workers like pharmacists, microbiologists, biochemists, chemists, dentists, doctors etc, and also employed over 1000 other staff.
“It indirectly provided jobs and business opportunities for thousands of Nigerians across the nation. They are now leaving all these behind, and pushing more people back into unemployment.
“I have consistently maintained that in turning our nation around, we must move the economy from consumption to production, part of which included encouraging and supporting local and foreign investments, like GSK, in the country.
“The creation of an environment that creates and sustains multinationals to invest in our country is key to our dream of greatness. In the new Nigeria that we seek to create, the emphasis on production will encourage investors to stay and expand on our shores.”
In the same vein, the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) has expressed concerns over the increasing exodus of companies from Nigeria.
Dele Kelvin Oye, NACCIMA president, spoke in a statement on Wednesday, August 9, in Lagos.
The association’s worry follows the recent decision of drug giant, GlaxoSmithKline (GSK), suspend it’s operations in Nigeria and resort to third-party distribution to serve customers in the West African market.
According to Oye, GSK’s exit from Nigeria has dealt a major blow to the country’s manufacturing sector, which hitherto has been in comatose.
The statement partly read thus; “While the current administration has commendably set Nigeria on a long-term path to economic progression, it has been noted that some of the immediate positive economic policies of President Ahmed Tinubu have had an adverse effect on certain sectors of the country,” he said.
“In particular, the sudden rise in the price of petrol and abolition of the official naira rate has caused a significant backlash, eroding the already earned income and trading capital of several multinational companies that had established their previous earnings based on the official naira rate at the time.
“As a result, there has been a steady exodus of multinational companies and the collapse of several local companies, resulting in significant job losses and economic damage.
“NACCIMA urges the government to urgently review the short-term impact of its economic policies as it relates to commitments already concluded for remittances/raw materials by the affected companies/ businesses to reverse the trend of companies leaving Nigeria.”
Proffering solution to the ugly situation, NACCIMA, however asked the government to prioritise infrastructure and power supply investments and provide tax incentives to encourage businesses to invest in Nigeria.
“Furthermore, NACCIMA urges the government to work collaboratively with the private sector to develop policies that will stimulate economic growth and create job opportunities in the country,” he said.
“We firmly believe that with the right policies in place, Nigeria’s economy can be revitalised and the country can become a hub for business and investment in Africa.”
Companies that have exited Nigeria in recent times
According to WITHIN NIGERIA findings, companies that have exited in Nigeria in the last decade include; Truworths, a South African clothing retailer, exited Nigeria in 2016 due to high rental costs, import restrictions and foreign exchange controls.
Etisalat, a UAE-based telecom company, exited Nigeria in 2017 after failing to repay a $1.2 billion loan from a consortium of banks.
ExxonMobil, a US-based oil and gas company, exited Nigeria in 2019 by selling its 40% stake in oil mining leases to local firms1.
Mr Price Group Ltd, a South African clothing and homeware retailer, exited Nigeria in 2020 due to operational challenges and low sales.
Shoprite, a South African supermarket chain, exited Nigeria in 2021 after selling its majority stake to a Nigerian company.
Unemployment rate in Nigeria
Presently, Nigeria has the highest global unemployment rate according to the World of Statistics made available on its Twitter handle on Monday.
The report, published on World of Statistics’ official Twitter handle on Monday, August 14 said Nigeria recorded the highest unemployment rate, with a figure standing at 33.3 per cent.
The World of Statistics also added that South Africa followed Nigeria with a 32.9 per cent unemployment rate.
Conversely, Qatar has the lowest unemployment rate of 0.1 per cent.
Nigeria has an estimated population of 223,804,632 in 2023, according to Wordometer.
WITHIN NIGERIA investigations showed that the last time the National Bureau of Statistics published its unemployment rate was in the first quarter of 2020, when it stood at 33.30 per cent.
However, as appalling as World of Statistics report might look, the continuous exit of the multinational companies in the country will further push up the figure to a dangerous rate and throw more working population into seeking for elusive job opportunities.