Experts are apprehensive that additional foreign companies might exit Nigeria in the wake of GlaxoSmithKline Consumer Nigeria Plc’s recent announcement to close its operations in the country. This decision has prompted fears that other multinational corporations could follow suit.
Various foreign enterprises have been substituting foreign resources with local alternatives as part of their survival strategies in the Nigerian market. GlaxoSmithKline (GSK), a company specializing in research, pharmaceuticals, vaccines, and consumer healthcare products, revealed that its parent company, GSK Plc UK, intends to halt the commercialization of prescription medicines and vaccines through its Nigerian subsidiary.
This move comes after Unilever Nigeria previously announced plans to discontinue the production of popular brands like Omo, Sunlight, and Lux. The declining value of the Nigerian naira against the dollar, combined with difficulties in repatriating funds, has created challenges for multinational corporations operating in the country.
The Association of Community Pharmacists of Nigeria expressed dissatisfaction with GSK’s exit, highlighting concerns that other multinational companies could follow suit. The National Chairman of the association, Adewale Oladigbolu, emphasized that GSK’s departure could have negative repercussions for the pharmaceutical industry in Nigeria.
Experts point to the shortage of foreign exchange as a significant factor contributing to GSK’s decision. Adewale Oladigbolu indicated that GSK is not leaving Nigeria due to financial distress, but rather because it has been unable to transfer money to its parent company for the past two and a half years. This situation is attributed to challenges in obtaining official approval and ethical methods for forex transfer.
A professor of economics at Onabanjo Olabisi University, Sheriffdeen Tella, emphasized that foreign companies’ exit from Nigeria can be attributed to multiple factors, including high interest rates, energy costs, and exchange rate volatility. These challenges collectively affect domestic production and competitiveness.
The Nigeria Employers Consultative Association revealed that GSK’s closure is part of a larger trend, with many other businesses either concluding their shutdown plans or already having shut down due to the challenging operating environment. The Lagos Chamber of Commerce and Industry echoed these concerns, urging the government to take comprehensive steps to enhance the business climate and make it more conducive for growth.