Navigating Turbulence: Companies that exited Nigeria in 2023
By Anietie Udoh
In the crucible of economic challenges, the year 2023 unfolded as a formidable test for businesses in Nigeria. A confluence of factors emerged, creating an environment that prompted several companies to make the difficult decision to exit the Nigerian market.
The inherent uncertainties tied to an election year cast a shadow over investor confidence. As is customary during general elections, businesses faced a climate of caution, with investors hesitant to commit to long-term strategies amidst unclear policy directions from the incoming administration.
Early in the year, an artificial cash scarcity compounded the challenges. This was exacerbated by a poorly executed currency note redesign, hampering consumer spending throughout the initial quarter. As the economy sought recovery in the second quarter, it encountered additional headwinds with the removal of fuel subsidies and the unification of the foreign exchange market. These reforms triggered an upward spiral in inflation, coupled with the Nigerian naira losing over 50% of its value.
Delving into the intricate dynamics of Nigeria’s economic landscape in 2023 reveals a series of business exits that unfolded against a backdrop of financial challenges and forex complexities.
This article unveils the landscape of departures, exploring the specific challenges that drove these companies to bid farewell to Nigeria during this testing year.
In April, the digital payments sphere witnessed a significant blow as Lazarpay, a web3 and crypto payment venture founded by the ambitious 21-year-old Emmanuel Njoku, ceased operations. Despite a promising start, the company’s demise after a mere two years reflected the harsh realities of fundraising struggles in a competitive market.
August brought forth a strategic shift for GlaxoSmithKline Consumer Nigeria, a subsidiary of GSK UK Group. Expressing frustrations with forex challenges disrupting operations, the pharmaceutical giant opted to transition to a third-party distribution model. The move underscored the broader impact of macroeconomic issues on even multinational corporations.
September marked the end of a tumultuous journey for 54Gene, a biotech firm that had raised an impressive $45 million in three funding rounds. The company’s closure, marked by three CEO changes, internal disputes, and legal entanglements, shed light on the complexities and uncertainties within the biotech sector.
In October, Mayor Biscuits Company Limited, colloquially known as MABISCO, made headlines with the announcement of the closure of its multimillion-dollar plant in Agbara Industrial Estate, Ogun state. Operational since 2016, the company, having garnered a 5% market share, opted to sell its assets, exposing the intense competition and market challenges in the fast-moving consumer goods sector.
November witnessed the Nigerian arm of multinational pharmaceutical company Sanofi Aventis following in the footsteps of its peers. In a strategic move, the company ceased operations in Nigeria, pivoting to a third-party distribution model. Notably, the undisclosed distributor added an air of mystery to the announcement, leaving industry observers speculating.
Bolt Food, a player in the competitive food delivery space, joined the wave of exits in November. The company cited the need to optimize resource utilization and streamline overall efficiency as the driving force behind its strategic decision. This move highlighted the increasing pressure on companies to adapt swiftly to economic challenges.
Procter & Gamble
Early December brought news of Procter & Gamble (P&G) dissolving its ground operations in Nigeria, reverting to an import-only business model. The decision, attributed to Nigeria’s macroeconomic problems and forex challenges, echoed the difficulties faced by dollar-denominated entities. P&G’s ambitious $300 million plant in Agbara, Ogun state, commissioned in 2017, faced economic headwinds, leading to its reported shutdown.
Not limited to Nigeria, Jumia Foods decided to discontinue its food delivery business across Africa. Citing the inherent challenges of the food delivery sector, the company opted for a strategic pivot, focusing on physical goods. The decision impacted countries such as Kenya, Uganda, Morocco, Tunisia, Algeria, and Ivory Coast, painting a broader picture of the difficulties faced in the African food delivery landscape.
As the pages of 2023 turned, Nigerian businesses navigated a labyrinth of economic challenges, marked by a sequence of exits that exposed vulnerabilities and necessitated strategic recalibrations. Each closure offered a unique glimpse into the intricate tapestry of Nigeria’s ever-evolving business environment.