Recently, there has been a lot of talk of international corporations leaving Nigeria, presumably because of the alleged difficult business environment caused by President Bola Tinubu’s policies since he took office on May 29, 2023. Some Nigerians, particularly those from opposing parties, have been making a big deal out of it on conventional and social media, as if an apocalypse had occurred in Nigeria.
Consider the situation of Guinness Nigeria, where a significant portion of Diageo, a European investor, was sold to the Tolaram Group, a Singapore-based company. Has anyone asked if our country has suffered any losses as a result of Diageo shares changing hands in Guinness Nigeria between two investors? Isn’t that what happens every day on the Nigerian Exchange (NGX) when stocks are traded?
The only difference in my opinion is the size of the shares swapped between the prior and subsequent owners, which is 58.2% and that is huge. In truth, this may have been a merger and acquisition, as is customary in the financial services industry. So what’s all the fuss about?
According to historical documents, Diageo’s formation began in 1997, when Guinness amalgamated with food and beverage distributor Grand Metropolitan PLC. The $15.8 billion transaction went successfully, and the two firms combined under the name Diageo.
Data from Finance.yahoo.com reveals DIAGEO’s ownership.
The leading institutional holders of the stock are:
(1)Bank of America Corporation , $5.1M for 664,620,064 shares.
(2)FMR, LLC $4.84M for631,245,335 shares.
(3)Morgan Stanley, $2.6M for 339,179,731 shares
(4)Clear Bridge Investments, LLC, $2.35m
Thus, what transpired with the share sales and purchases between Diageo and the Tolaram group is simply business as usual, and nothing suspicious in my opinion. Please take note that all of Diageo’s institutional investors are investment banks and enterprises based in Europe and North America.
Interestingly, other multinational corporations that have made waves moving out of Nigeria during the last ten years—and not just in the one year under President Bola Tinubu’s leadership—are mainly American and European companies, ranging from Procter & Gamble in Ibadan to GSK in Lagos.
That is to say, a pattern has been gradually developing over time without the system noticing. And guess what foreign companies have been stepping in to fill the void left by American and European companies? Asian companies. These include both Chinese and Indian corporations. Even Singaporean and Lebanese firms have presence in the list.
An Asian company that specialises in sanitary products for adults and children, similar to Procter & Gamble, is currently in the process of opening a factory to cover the void left by P&G’s withdrawal. Just before Tolaram Group acquired Diageo’s stake in Guinness Nigeria, a group of Nigerian investors, Renaissance Group had purchased SHELL’s onshore holdings when the British and Dutch-owned oil giant made the decision to shift its activities to the offshore market and stay there solely.
The choice to limit operations to the offshore sector is thought to have been made in order to avoid the problems that arise from subpar work or a failure to uphold corporate social responsibility, which can lead to environmental damage from careless exploration and subsequent exploitation of the oil resources in the Niger Delta, which in turn can cause unrest that exacerbates the ongoing instability in the area.
The building sector has experienced similar events to those that have recently transpired in the oil and gas and manufacturing sectors.Since Europe was the continent that first colonised Africa, the majority of the continent’s businesses and infrastructure are either owned or run by partners in Europe or America. That is because of the transition from colonialism to neo-colonialism by the Europeans that ruled Africa.
The colonialists used their contractors to construct roads, bridges, railways, airports, seaports, and notable architectural projects throughout Africa. Most of that occurred in the 1960s, 1970s, and 1980s, and it’s possible that it continued until 2000. But the entry of Asian companies into the market has made them less competitive.
While those opposed to the economic reforms claiming that our country is down and has no hope of being resuscitated, using the analogy of whether a glass is half empty or half full, as a patriot my optics is that the glass is half full for very good reasons.
In my opinion—I lack scientific support for this—it seems as though Asian companies have been displacing Western companies over the last 20 years or so.
The building companies from France, Italy and Germany that once controlled the Nigerian construction market are nowhere to be found.Currently in decline, Chinese and other Asian companies are displacing them.Who are the Chinese building all the major airports in Nigeria? Which Chinese companies are revitalising our rail networks?
Who in Lekki, Lagos, constructed a brand-new deep-water port in a comparatively short amount of time? the Chinese people. Examine the skylines of Lagos and other major Nigerian cities to determine whose construction companies are constructing the tall buildings: Chinese, Singaporean, and Lebanese companies, not European or American companies as was previously the case.
Indians are firmly establishing themselves in the information technology and pharmaceutical industries, much like the Chinese are dominating the construction of railroads, airports, and seaports throughout Africa, including Nigeria.
In my opinion, if research is done to determine whether there has actually been a loss since the departure of companies like GSK and P&G, among others, I doubt that it will not show that the Asian companies that took their place have increased employment and increased the GDP of our nation.
I am issuing a challenge to everyone who disagrees with President Tinubu’s current reforms, citing their reasons for the departure of companies like GSK and P&G as well as Diageo’s sale of 58.2% of its shares to the Tolaram group, to carry out or commission a study to support their claims.
It should be the mission of PriceWaterHouseCoopers, Ernst and Young, and other multinational research firms—including the native Nairamatrics—that take pleasure in being purveyors of business statistics to disprove or validate the assertion.
Based only on trend analysis, my educated guess is that after around 64 years of Nigeria’s political independence from Britain, the continent is only now experiencing true economic independence.
Even though Nigeria gained its independence in 1960 and the British removed the Union Jack, neo-colonialism—the next stage of colonialism—persisted, with European and British corporations controlling the private sector and even holding a vice grip on governments.
The Ogoni land oil exploration catastrophe, which resulted in the execution of environmental rights campaigner Ken Saro-Wiwa and the iconic Ogoni 9 tragedy, was one such instance involving SHELL Nigeria. It is no secret that multinationals like as GSk and P&G run their activities out of their headquarters in New York and London.
Why couldn’t the companies, which have been repatriating profits to their home countries over the years, be given some funds to get them through the rough patch caused by the ongoing reforms in Nigeria that have made it slightly more difficult to repatriate funds, if they were facing difficulties due to their high cost structure or restricted access to foreign exchange to procure raw materials?
In actuality, the companies that departed Nigeria have been dependent on Nigeria to finance their operations. But because of the country’s current shaky financial services sector as a result of ongoing reforms, they have taken flight.
This is demonstrated by the elimination of the petrol subsidy, which has caused production costs to soar; the effort to harmonise the dual foreign exchange rates, which up until now had encouraged arbitrage; and, last but not least, the exorbitant increase in the electricity tariff for the so-called Band A consumers, which is, in a sense, the straw that broke the camel’s back.
Due to all of the aforementioned circumstances, those businesses were forced to dissolve when they realised that things in Nigeria were no longer as they had been. Maybe when they modify their business models, they will be back shortly.
However, from the way those opposed to the ongoing reforms present the conglomerates’ exit, it appears as though the companies were charity organisations founded by USAID or Oxfam to protect Nigerians from starvation, similar to how Sir Bob Geldorf founded Band-Aid in the 1980s to help raise money to aid starving people in the Horn of Africa.
Not to be overlooked, the goals of GSK and P&G are to generate revenue for their stockholders. Why should we lament their departure if their business models are no longer effective for them in Nigeria as they once were and they have made the decision to leave?
Bearing in mind the hostility of international oil companies denying access to crude oil for refining in Dangote refinery as recently alleged by Alhaji Aliko Dangote, and the rough time that Mr Allen Onyema’s Air Peace had in flying Nigerians at reduced fare to London, a lucrative route hitherto monopolized by British airlines, European businesses in Nigeria appear to be losing their competitive edge and fighting dirty.
It is important to remember that the main telecom companies from Europe and America showed no interest in Nigeria when the country was unbundling its telecom industry a little more than 20 years ago. However, the licences were obtained by Econet, a Zimbabwean network, and MTN, a South African network. Together with Globacom, a network that is exclusively owned by a Nigerian, these three networks have been controlling the market for more than 200 million users.
Following the successful privatisation, American and European businesses have been vying for a share of the pie.A similar situation occurred in the energy sector, when no significant European businesses expressed interest at the time it was unbundled . But because of the industry changes brought about by the 2023 Electricity Act, companies like Siemens of Germany, who previously shied away from making large investments in Nigeria’s power sector, are now keeping a close eye on our nation.
GSK, P&G, and other companies should definitely make a comeback to Nigeria sooner rather than later, since the country’s population of over 200 million makes it impossible to overlook. I can bet that if GSK and P&G had put up their firms for sale as Shell and Diageo did, local Nigerian entrepreneurs could have acquired them.
It is in the spirit of global south-south co-operation that investments are now flowing more easily between them. With President Tinubu’s recent stringent efforts at wooing investors from the Middle East when he toured Saudi Arabia,United Arab Emirates, UAE and Qatar, Arab investors may also sooner than later set their sights on Nigeria.
I’ve heard comments in the media claiming that Asian and Chinese companies that are taking the place of departing European and American companies don’t adhere to good corporate governance norms.
When SHELL Nigeria perpetrated the crimes on Ogoni territory that the International Court in The Hague eventually managed to force it to clean up and is still pursuing, was it not obligated by the highly regarded corporate governance rules in its home countries of England and the Netherlands?
The reality is that Singaporeans, Chinese, or Indians no longer lack strong standards for corporate governance. They are active in the American and European markets as a result of their engagements in those markets, so they are conversant with the standards and their economies are flourishing.
Since no Asian companies have been found guilty when it comes to environmental abuse, such as the Royal Dutch Shell in Nigeria has been adjudged guilty of environmental degradation of the Niger delta , there is no proof of that claim that they are too slack in that respect.
Based on my experience, corporate governance regulations are typically raised during the administration of contracts and hiring processes in European and American backed multinationals.
In any case, the NGX is doing a fairly good job of regulating publicly quoted firms, and Nigerian extractive industries regulatory agencies in the oil and gas sector are expected to keep a close eye on industries in that sector to ensure that there is not a corporate governance void left by existing Western countries.
To sum up, I think the current reforms are good and have the potential to create a new Nigeria.I am fully aware of the extreme problems we are all facing as a result of the shockingly high cost of living brought on by the policy to remove subsidies.
We are all on the same boat, navigating the waves of the high cost of living. To get the ship to the land, all hands must be on deck, thus we should all make efforts even if it is tiny to support one another in order to survive without depending solely on government. Let’s engage in recreational farming in the yards around our homes during our free time. We may produce basic crops like tomatoes and vegetables, which are currently expensive, before insecurity concerns that forced our farmers to abandon their operations and the cause of the food scarcity is resolved.
While one supports the government’s call for Nigerian farmers to return to their fields, it is imperative that it first provide sufficient protection to stop the evil ambassadors from abducting more of our hard working farmers.
Prioritising the use of advanced technology in the fight against insecurity is vital, as is increasing the involvement of sociologists and psychologists in a non-kinetic manner to counteract the criminality that seems to be taking over our nation.
There has been an enormous dependence on military actions to counter the threat up to an elephant size , while the soft approach has been treated with an ant size effort.
Barack Obama, a former US president, once cautioned, “Just because we have a big hammer doesn’t mean we have to keep hitting all the nails.”
In order to fully reap the rewards of President Tinubu’s socioeconomic and political changes, let us take a different approach to combating religious insurgency and banditry so that our country can flourish as the reform policies being introduced by President Tinubu begin to mature.
–Magnus Onyibe, an entrepreneur, public policy analyst, author, democracy advocate, development strategist, an alumnus of Fletcher School of Law and Diplomacy, Tufts University, Massachusetts, USA and a former commissioner in Delta state government, sent this piece from Lagos, Nigeria.
To continue with this conversation and more, please visit www.magnum.ng.