By Tony Obiechina, Abuja

The year 2023 proved to be one of the most challenging periods for businesses in Nigeria especially the manufacturing sector.

This could be attributed to various factors notably the harsh economic environment the manufacturing companies operated.

The situation no doubt has led to a good number of such companies leaving Nigeria’s shores to neighbouring countries blaming lack of reliable infrastructure, including power shortages, poor road networks, and limited access to ports and airports which made it difficult for them to move goods and raw materials around, in and out of the country.

The latest of such companies to close shop is Africa’s largest syringe firm, Jubilee Syringe Manufacturing (JSM) company in Awa, Onna Local Government Area of Akwa Ibom, which ended its operations last month.

The company owned by a Turkish national, Onur Kumral is one of the several industries attracted to the state by the administration of Governor Udom Emmanuel.

Inaugurated in 2017 by former Vice President Yemi Osinbajo, the company had stopped production many months ago, but it finally announced the end of operations on Dec. 31, 2023.

This is against the backdrop of many manufacturing companies that have left Nigeria’s shores to neighbouring countries blaming lack of reliable infrastructure, including power shortages, poor road networks and limited access to ports and airports which made it difficult for them to move goods and raw materials around, in and out of the country.

Other companies that had earlier exited Nigeria included Lazarpay, a website and crypto payment company, GlaxoSmithKline Consumer Nigeria, 54Gene, MABISCO Biscuit, Sanofi-Aventis Nigeria, among others.

In shutting down its operations, Jubilee Syringe Manufacturing (JSM) company in a memo addressed to all the workers of JSM, stated that all positions had been placed on temporary redundancy effective Jan. 1, 2024.

The statement titled, “Temporary Redundancy  – Service Not Needed Till Further Notice,’’ and addressed to all workers read in part, “We trust this message finds you in good health.

“It is with a heavy heart that we write to you today to communicate a challenging decision that Jubilee Syringe Manufacturing company limited has had to make due to unforeseen circumstances affecting our business operations.

“After careful consideration and a thorough evaluation of our current business situation, we  regret to inform you that we must implement temporary measures to ensure the long term sustainability of the company.

“We want to emphasise that this decision is not a reflection of your individual performance or dedication to the company. The challenging business environment we find ourselves in, has compelled us to take these difficult steps.

“Please return all company belongings in your custody.

“Thank you for your understanding and cooperation during these challenging times.”

Lazarpay — In April, Lazerpay, a website and crypto payment company co-founded by 21-year-old Emmanuel Njoku announced it was shutting down operations after failing to raise funds to keep the company afloat. The company operated for only two years before calling it quits.

GlaxoSmithKline Consumer Nigeria – In August, GSK UK Group announced its intention to cease commercialisation of its prescription medicines and vaccines in Nigeria through the GSK local operating companies and transition to a third-party direct distribution mode.

The company had earlier complained that challenges accessing forex were disrupting its operations in Nigeria.

In surrendering to defeat, the company had to pivot to a third-party distribution model for its pharmaceutical products. 

The company’s exit came as a shock to many who had grown accustomed to its products and further highlighted the extent of the nation’s macroeconomic woes on the business community.

54Gene – 54Gene shut down in Sept. last year bringing an end to its four-year existence in which it raised a whopping $45 million in three funding rounds.

The company’s death in Sep. culminated in a tumultuous year in 2022 where it had three CEOs, a series of complaints from staff and other legal issues. 

MABISCO Biscuit- In October, Mayor Biscuits Company Limited popularly called MABISCO announced it is shutting down its multimillion-dollar plant in Agbara Industrial Estate, Ogun state.

According to a statement from the company’s management, they intend to sell the company and focus on other business areas.

The company started operations in 2016 and it was reported to have accumulated around 5percent share of the market in its seven-year history.

Sanofi-Aventis Nigeria Ltd – In November, the Nigerian arm of the multinational pharmaceutical company Sanofi Aventis in a similar fashion to GSK and P&G announced its ceasing operations in Nigeria and pivoting into a third-party distribution business model in a letter sent to its partners.

Although the company announced a third-party distributor would handle its products in Nigeria, it declined to name the distributor. 

Equinor – Divestment from international oil majors in Nigeria’s petroleum industry has become common in recent times as Equinor Nigeria Energy Company (ENEC) announced in Nov. the sale of its 85percent stake in oil and gas lease OML 128, and a 20.21percent stake in the Agbami field, operated by Chevron to Nigerian owned Chappal Energies.

While the cost of the transaction was not disclosed, a statement from the company noted that its business in Nigeria had been profitable and the decision to sell syncs with its “strategy to focus on international oil and gas portfolio and core business areas”.

The sale of its assets brought an end to Equinox’s over three decades of presence in Nigeria dating back to 1992.

Bolt Food – Bolt Foods joined the train of companies exiting the Nigerian marketplace in Nov. when it announced its end of operations in Nigeria.

The company cited the need to optimize resource utilization and streamline overall efficiency as responsible for its latest strategic decision.

Procter & Gamble (P&G) – In early Dec., P&G announced the dissolution of ground operations in Nigeria and reverting to an import-only business model for its Nigerian market.

The company noted that Nigeria’s macroeconomic problems and forex challenges in Nigeria were responsible for its decision since it was difficult to operate as a dollar-denominated entity.

In June 2017, the company commissioned a $300 million state-of-the-art plant in Agbara, Ogun State but just a year after, there were reports the plant had shut down over economic issues as it had difficulty breaking even.

Jumia Foods – Not only Nigeria was a casualty of Jumia’s decision to pull the plug on its food delivery business in Africa, but across all countries on the continent where Jumia Food operates such as Kenya, Uganda, Morocco, Tunisia, Algeria, and Ivory Coast.

The company noted that the food delivery business in Africa was difficult, and it wanted to focus on physical goods where there was a path to profitability. 

Commenting on the development, foremost economist, Professor Uche Uwaleke told Daily Asset in exclusive interview on Sunday that the exit of the companies from Nigeria has negative implications for job creation, economic growth and inflationary expectations.

Uwaleke who is Nigeria’s first Professor of Capital Market and the Director of the Institute of Capital Market Studies at the Nasarawa State University Keffi, blamed the exit of these companies majorly on persistent Forex challenges.

His words: “It goes without saying that the exit of companies from Nigeria against the backdrop of a drastic drop in foreign direct investments has negative implications for job creation, economic growth and even inflationary expectations.

“A major reason for the exit of these companies has been the persistent forex challenge. Government’s current efforts aimed at improving liquidity in the forex market via dollar loans should be seen for what it is – a stop gap measure.

“A sustainable solution requires ramping up oil production to take advantage of favourable crude oil price. It also involves developing other sources of forex including solid minerals and agriculture.

“Overall, the business environment in Nigeria remains unconducive and burdened by weak infrastructure such as epileptic power supply, bad roads and insecurity. There’s equally the issue of corruption, poor access to credit and multiple taxation.

“The Presidential Committee on Fiscal Policy and Tax Reforms is currently working on streamling taxes. It is hoped that the outcome of the committee’s work will help improve the tax environment.

“The fact remains that the president’s foreign trips to woo foreign investors can only bear fruits only when these challenges are dealt with and a business-friendly environment is in place.”