VenturesNow

Exit by multinational companies to cost Nigeria $335 million in FDI

Published

12 months ago

December 7, 2023

Nigeria’s economy is expected to lose $335 million (about N310 billion) in foreign direct investment (FDI) owing to continued exit by multinational companies.

Recently, the country has suffered the exit of high-profile firms amidst rising operation costs. The sum reflects the combined asset value of the most recent exit announcements made by Equinor, a major global player in the upstream oil sector, and Procter & Gamble, a major global player in the Fast Moving Consumer Goods, or FMCG, segment.

The American multinational consumer goods company, Procter & Gamble (P&G), is winding down its on-the-ground presence in Nigeria, while Equinor is also leaving after selling its Nigerian business, including its share in the Agbami oil field to Nigerian-owned Chappal Energies. P&G plans to switch from local production to solely importing its products.

Explaining the decision, Andre Schulten, chief financial officer, P&G, said the decision was a result of “the challenging business environment in Nigeria, as well as the difficulty in creating US dollar value”.

Equinor’s Senior Vice President for Africa Operations, Nina Koch, maintained, “Nigeria has been an important part of Equinor’s international portfolio over the past 30 years, but the transaction becomes necessary as it would enable it to “realise the value and is in line with Equinor’s strategy to optimize its international oil and gas portfolio and focus on core areas.”

A few months ago, GlaxoSmithKline Consumer Nigeria Plc, a company that developed and manufactured innovative pharmaceutical medicines, vaccines, and consumer healthcare products, shut down its operations in Nigeria, leading to the loss of jobs and ultimately causing a surge in the prices of drugs.

Nigeria’s underdeveloped power sector is a bottleneck to broad-based economic development and forces most businesses to generate a significant portion of their electricity. It has also been a major factor in capital flight from the West African country, Africa’s largest economy.

VenturesNow

Food prices drive second straight monthly hike in Nigeria’s inflation

Published

11 hours ago

November 17, 2024

Ifeoluwa Dada

According to official statistics released on Friday, Nigeria’s inflation rate increased for the second consecutive month in October, rising to 33.88% in annual terms from 32.70% in September, mostly as a result of increasing food costs.

In an attempt to boost economic development and strengthen public finances, President Bola Tinubu devalued the naira and reduced subsidies, which caused inflation to spike in the second half of last year.

As the effects of the naira devaluation started to lessen in July of this year, a slew of hikes in the price of petroleum and devastating floods that destroyed crops once again exacerbated pricing pressures, making the greatest cost-of-living crisis in decades worse in Africa’s most populous country.

According to the National Bureau of Statistics, price increases for basics such as rice, maize, bread, potatoes, and cooking oil prompted food inflation to surge from 37.77% in October to 39.16% year over year.

This year, more than 1.5 million hectares of agriculture have been damaged by torrential rain and floods in 29 of Nigeria’s 36 states, leaving millions hungry and displacing large numbers of people.

In an effort to curb inflation, the central bank has raised interest rates five times this year. On November 26, it is expected to make its final rate decision of the year.

VenturesNow

MTN financial report reveals drop in group service revenue

Published

11 hours ago

November 17, 2024

Ifeoluwa Dada

Due to operational difficulties in Sudan and the depreciation of the Nigerian naira, MTN Group, Africa’s largest telecom provider, announced on Thursday an 18.5% decline in service revenue for the third quarter that concluded on September 30.

With 288 million users in 17 African regions, MTN said that its group service revenue dropped from 156.3 billion rand ($6.99 billion) in the same quarter of the previous year to 127.4 billion rand.

Despite stating that “the naira was less volatile on a sequential basis in Q3 than in preceding quarters,” the business reported a 48.7% decline in MTN Nigeria’s income due to the currency’s depreciation.

Due to a stronger Ugandan shilling than the previous year, Uganda’s largest contributor, MTN South Africa (MTN SA), expanded by a meagre 3.3%.

Due to “subscriber registration regulations in Nigeria and a decline in users in Sudan, where the conflict has displaced millions of people,” the business reported that its subscriber base increased by 1.6% to 288 million.

Given the higher demand in Nigeria despite the legal obstacles, MTN plans to increase its capital expenditures, which it expects would total between 28 and 33 billion rand for the entire year.