The EIU predicts exit of more multinationals from Nigeria in 2024

The Economist Intelligence Unit (EIU) has said uncertainties in Nigeria's economic climate may force more multinationals to leave the country in 2024.

This comes amid the recent surge in the number of companies that have either shut down operations or exited the country to set up camp in other countries due to the biting economic realities.

According to a latest report by the international business research firm, Domestic Oil Companies (DOCs) in Nigeria that have declared interest in acquiring the assets of the divesting international oil companies (IOCs) may not have the financial capacity to sustain the investments in the long run.

This development, the EIU said, may lead to a withdrawal of foreign direct investment and a repeat of the mass exodus witnessed in the country's business environment where a massive number of multinationals left the country in 2023 and most especially, in the past 10 years.

“The wider business environment will remain highly challenging, undermined by corruption, cronyism, rampant insecurity and a giant infrastructure gap.

“Multinationals are increasingly deciding to quit Nigeria or reduce their presence; we estimate there was a net withdrawal of foreign direct investment in 2023, to be repeated in 2024 as naira losses exert pressure on balance sheets carrying large foreign liabilities,” the EIU said.

According to the Executive Secretary, Nigerian Content Development and Monitoring Board, Engr. Simbi Wabote, Nigerian oil firms have acquired about 26 oil mining licenses in the Niger Delta basin area in the last decade.

Nigeria, over the last 10 years has witnessed an exit of top companies that have either shut down operations completely or relocated their services to other countries.

Apart from the manufacturing and the Fast Moving Consumer Goods (FMCG) sector, the oil industry has in the past months, witnessed an exit of some IOCs who have indicated interest in divesting their operations in Nigeria.

Reports have mentioned that these IOCs including Shell Producing Development Company, Total Energies, Chevron, ExxonMobil and Eni have confirmed that most of the assets targeted for divestment were the onshore properties located mostly in shallow waters on land.

According to the Africa Report, IOCs had divested a total of 26 Oil Mining Licenses in the Niger Delta Basin within 11 years. Some reasons have been given for the action which include insecurity, oil theft, and entrenched hostilities in host communities, which ultimately contribute to the high costs and risks of continued operations.