KingTom:

Werey

DIAGEO, the United Kingdom-based owner of the iconic Guinness brand became the latest multinational to dilute its shareholding in a major outfit in Nigeria. This again points to the grave failings of the policy environment that have spooked multinational organisations with serious implications for new investments, employment, and the economy at large.

Eyebrows were raised recently when Diageo sold 58.02 per cent of its shareholding to Tolaram, a multinational. Diageo still produces several beverages in Nigeria.

However, some multinationals completely exited Nigeria. Those leaving cited higher operating costs that have eroded profits, inability to access forex, and a harsh regulatory environment as major reasons. Foreign direct investment into Nigeria fell by 26.7 per cent to $3.9 billion in 2023 from $5.3 billion in 2022. Household names like Procter & Gamble, Unilever, Kimberly Clark, GlaxoSmithKline, and Sanofi Aventis have exited fully or converted their business models to import and distribution. Jumia Foods and Bolt Foods are gone.

Microsoft and Meta have downsized their operations. PZ Cussons Plc is considering leaving Africa as a whole, partly due to its Nigeria woes, which have resulted in a 48 per cent drop in sales. The CEO, Jonathan Myers, cited macroeconomic challenges and complexities.


Most worrisome is the departure of Shell, TotalEnergies, ExxonMobil and Equinor. The IOCs are divesting their assets away from Nigeria with investments in other African countries with better business environments. Oil theft, insecurity, and hostile communities are chasing these companies away from a sector that accounts for 95 per cent of Nigeria’s foreign exchange earnings.

TotalEnergies recently announced a commitment of $6 billion to developing the Kaminho oil project offshore Angola after dumping Nigeria as an option. It is investing $600 million in Congo. The company’s boss, Patrick Pouyanne, blamed the decision on Nigeria’s erratic policy environment that has made investments untenable.

The government says these issues will be resolved with the ongoing economic reforms and has acknowledged that the absence of a liquid foreign exchange market is a key factor in the exit of the multinational. Minister of Finance, Wale Edun, is optimistic that things will improve. We do not share such optimism.

Multinationals play a key role in job creation, technology transfer, contribution to the tax pool, CSR programmes, and signalling for foreign investors. These departures have a negative multiplier effect on small and medium-scale companies, which are their suppliers and service providers. Thousands of jobs have disappeared.

It is incongruous that this administration has been busy globetrotting, seeking new investors while the existing ones are fleeing. That the government does not see the urgency of the situation is shocking. The fiscal policy and tax reforms that ought to provide a clear new direction and remove regulatory and tax bottlenecks should have been implemented by now.

Africa’s richest man, Aliko Dangote revealed that the Federal Government takes 52 per cent tax on every N1 his company earns in profit and that policy inconsistencies could easily lead to business bankruptcy. This sums up a picture of why Nigeria cannot be an investment destination of choice unless these issues are addressed quickly.

For a government that has sold itself as business-friendly, it must prioritise measures that support businesses, such as lowering taxes, streamlining business processes, trade facilitation, and creating a regulatory environment that is not predatory but delivers on enterprise development.

The focus should not be on how much government can extract from businesses. Businesses need to be thriving to recruit and pay employees, meet tax obligations, and undertake CSR. Policies should be clear and consistent.

Security must be improved to support agriculture and the oil and gas sector. The government needs to upgrade existing infrastructure. There is no point committing N15 trillion to the Lagos-Calabar Coastal Road when the existing highways are shabby.

Ballzproblem2:
We dey fight godfatherism for Rivers state this isn't just blind support for fubara na wetin simple minds no fit grasp wether fubara na competent or not wike no smell power for Rivers state, we're good. 😌

BlueRayDick:


Nigeria’s Worrisome Corporate Exodus - Punch Editorial

https://www.nairaland.com/8129052/nigerias-worrisome-corporate-exodus-punch .

I thought the argument has always been that we dont pay enough tax in Nigeria . Here is Dangote alleging he pays 52 per cent tax on every one Naira his company earns. Let’s not forget the multiple taxation we the common men face .

At least we can see that it’s not because the foreign investors cannot compete that’s why they are leaving in droves . I mean ; in what investment friendly country will u be expected to pay 52 per cent tax , forced to provide your own electricity , forced to pay community development levies , face difficulties in repatriating profit in foreign currency, face security threat to ur expats , etc ?

izzou:


If you want to survive a Nigerian FMCG market, you have to be a Nigerian:

What do i mean?

Terrible work environment
Cut corners
Lobby and pay bribes
Undepay staff
Ati be be lo.

Na why these big names go find am hard to adjust. No matter how they try to reduce their price, they cannot become like us. Na why Asians dey survive here. Quality product, but go and see the work conditions or salary, and you'll understand better.

BlueRayDick:


I know na, but u will agree with me that there's been a dangerous narrative being peddled around in recent weeks that those leaving simply becuase they can't compete with naija competitors.

What our people fail to understand is that the so-called competition is to our detriment in the first place. How many Nigerian owned business will provide to their staff similar benefits which companies like Shell, Total, etc provide for their staff?

Like u rightly posited, there is a limit to how they can adjust their price. Even the wages they pay their staff, it will take serious bribing of Trade unions for them to pay them below their standard in other parts of the world where they operate. All in all, Nigeria is really investment friendly to an ethical business investor who wants to play things by the rule of the book.

BlueRayDick:


I know na, but u will agree with me that there's been a dangerous narrative being peddled around in recent weeks that those leaving simply becuase they can't compete with naija competitors.

What our people fail to understand is that the so-called competition is to our detriment in the first place. How many Nigerian owned business will provide to their staff similar benefits which companies like Shell, Total, etc provide for their staff?

Like u rightly posited, there is a limit to how they can adjust their price. Even the wages they pay their staff, it will take serious bribing of Trade unions for them to pay them below their standard in other parts of the world where they operate. All in all, Nigeria is really investment friendly to an ethical business investor who wants to play things by the rule of the book.

it is NIGERIANs first and foremost who create difficult environments for ethical investors

the government plays a part, but nigerians play their part as well

i saw a promising company that could have become an industry leader die and the oyibo investors pulled out because the CEO looted the company. they brought in one oyibo auditor like that, but they ran rings around the guy. if they had pulled out today not 4 years ago people would have been shouting tinubu when the reality is that the management looted the company until it was not viable

one of the reasons for high energy costs is internal fraud. try to deploy a proper system for measuring fuel consumption and you will experience resistance from different arms of the company.

BlueRayDick:


Nigeria’s Worrisome Corporate Exodus - Punch Editorial

https://www.nairaland.com/8129052/nigerias-worrisome-corporate-exodus-punch .

I thought the argument has always been that we dont pay enough tax in Nigeria. Here is Dangote alleging he pays 52 per cent tax on every one Naira his company earns. Let’s not forget the multiple taxation we the common men face .

At least we can see that it’s not because the foreign investors cannot compete that’s why they are leaving in droves . I mean ; in what investment friendly country will u be expected to pay 52 per cent tax , forced to provide your own electricity , forced to pay community development levies , face difficulties in repatriating profit in foreign currency, face security threat to ur expats , etc ?

BlueRayDick:


Make una take am easy o, make dem no declare state of emergency for Rivers state o

LordAdam16:


That argument only applies to personal income tax and related individual contributions.
Our large companies pay the lion share of taxes in Nigeria.
In 2020, PIT and CIT made up 11% and 35% respectively of our tax revenue. In the OECD, the numbers are 24% and 9%.

It is easier to extract tax receipts from and levy penalties on the large companies than on the average Joe.

-Lord

BlueRayDick:


Personally I still think the government is to blame for this. There's nowhere in the world where there's no corruption, it is the institutions in place that helps to checkmate the corrupt practices. If the company nabs a corrupt CEO/Member of senior management and our security agents actually assist in recovering every recoverable, won't it boost the confidence of foreign investors in our justice system ?

Most multinationals have long moved past buying expensive diesel s source of energy. Most of them have invested in gas turbines to generate electricity. So I don't think employees stealing diesel is the reason they are expending high energy costs. There are so many other costs affecting the business; there's security on the highway, banditry , etc.

BlueRayDick:


Personally I still think the government is to blame for this. There's nowhere in the world where there's no corruption, it is the institutions in place that helps to checkmate the corrupt practices. If the company nabs a corrupt CEO/Member of senior management and our security agents actually assist in recovering every recoverable, won't it boost the confidence of foreign investors in our justice system ?




Most multinationals have long moved past buying expensive diesel s source of energy. Most of them have invested in gas turbines to generate electricity. So I don't think employees stealing diesel is the reason they are expending high energy costs. There are so many other costs affecting the business; there's security on the highway, banditry , etc.

izzou:


It is oh.

Only the very few can afford turbines. And even at that, they still need diesel, especially if they are handling their distribution.

Diesel mago-mago na serious business oh.

If not that the subsidy on Kerosene was removed, we would have been the highest producer of adulterated diesel in the Universe and Multiverse.

GloriousGbola:


mix diesel with kerosene, mix it with kpofire, mix it with all mixables

then the maintenace guys get called - pump is not sucking our product

I tell you

The moment subsidy on Kerosene was gone, there was wailing and gnashing of teeth amongst tanker drivers, petrol stations, and so many other Benefit boys from that system

izzou:


It is oh.

Only the very few can afford turbines. And even at that, they still need diesel, especially if they are handling their distribution.

Diesel mago-mago na serious business oh.

If not that the subsidy on Kerosene was removed, we would have been the highest producer of adulterated diesel in the Universe and Multiverse.

BlueRayDick:


That's becuase there are so many unofficial taxes that the government allows to flow into the hands of non-state actors.

For example, for a normal 18 passenger bus that loads in a park in Lagos, the agbero's collect a cash equivalent of 4 passengers' fare from the driver. This cost will certainly be factored into the eventual fare all passengers pay. If the vehicle is going on an interstate journey, then be rest assured the driver will still have to settle security agents at different checkpoints.

Looking at it on the surface it appears the common man who pays PIT has it easy, but when u look at other unofficial leakages that are tacitly supported by the government, then one would see a clearer picture.

BlueRayDick:


Well, that's why most companies have outsourced their distribution arm of business. Most of those manufacturing companies have long-stopped carrying their own products na.

izzou:


This hasn't exonerated the companies from bearing the brunt on Diesel price fluctuations or mago-mago.

If the price of Diesel changes by 10 naira today, dem go change their rates

If people in their own system are chopping anyhow, they transfer the price change to their customers.

IHS that is powering MTN sites will always run back to MTN to change price, even though their staff dey sell the diesel (I'm assuming)

And besides, not "Most" have outsourced. Dangote still carries his product. Flour mills still carry their product. Even Ardova and the big fuel guys carry their own by themselves.

Its a cycle that no matter how you shift back, it has a way of coming back to you.

GloriousGbola:


We have an ihs mast renting space from us in one of our sites. One day during an upgrade project we saw the site security man selling diesel for the generator.

afrodoc2:
https://www.nairaland.com/8129338/adeboye-womans-breast-cut-off


What God cannot do does not exist.

Theflint1:
At what point in time did Nigerians pickup this habit of theft? I want to imagine cases of theft have been in existence since forever, yet these businesses weren't going under at the rate we're seeing today. Or is it that we expect that as the economy is tanking, the thieves will grow a conscience and go make I pity my Oga business and not steal like I used to

Theflint1:
If you're someone that believes in blind faith as espoused by Christianity, this is nothing really. Those early 2000s wey crusades still dey reign, all this one na normal thing.