New report predicts exit of more multinational firms from Nigeria

Nigeria's Fast Moving Consumer Goods subsector has been projected to lose more players in 2024 due to the harsh economic realities.

A report published by financial solutions firm, Cardinal Stone and titled ‘Strategic Resilience: Sailing Through Business Disruptions’ identified high operating costs as a major factor which could lead to the mass exodus of firms operating in the FMCG sector.

The report also noted that the sector is the major casualty of the harsh economy due to its heavy exposure to changes in commodity prices, exchange rates, import and clearing duties, and freight costs.

This prediction comes amid the mass exit of about six major multinationals from Nigeria within a space of 10 months. These include Unilever, GlaxoSmithKline Consumer Nigeria Plc, Sanofi, Bolt Food, Procter & Gamble and Jumia Foods.

The mass exits have led to reduced foreign investment inflows and have affected Nigeria's target of hitting a $1 trillion economy target by 2030.

The report read in part, “In 2024, we expect companies to continue to re-imagine their operational strategies to achieve cost efficiency.

“We also see legroom for more collaboration between FMCGs to boost economies of scale, product portfolio diversification, revenue and cost synergies, technological innovations, and financial power of the resultant entity."

“The alternative path may eventually degenerate to exit from the operating environment or high-cost segments, similar to the cases with Procter and Gamble, GSK, Pernord Ricord, and Unilever.”

The United Nations Conferences on Trade and Development also revealed that for the first time in at least 33 years, foreign direct investment inflows into the country turned negative (-$187 million) in 2023.

The report further hinted at the possibility of the Nigerian FMCG sector not benefiting from the moderation in global commodity prices due to the depreciation of the naira, which significantly dropped from ₦422.00/$ in June 2023 to ₦951.94/$ in December 2023, after CBN’s unification process.