Lately, there has been a lot of buzz about multinational firms exiting Nigeria ostensibly due to an alleged harsh business environment arising from President Bola Ahmed Tinubu’s policies since he assumed office on May 29, 2023.
Tinubu
Take, for instance, the case of Guinness Nigeria, where a substantial share of
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Diageo, a European investor, changed hands with Tolaram Group, a Singapore-based firm.
Some Nigerians, especially of the opposition parties’ stock, have been making a song and dance of it in the traditional and social media about it as if an apocalypse has occurred in Nigeria.
Has anyone bordered to ask if there is anything that our country has lost as a result of shares changing hands in Guinness Nigeria between two investors— Diageo and Tolaram Group?
Is that not what happens in the Nigerian Stock Exchange (NSE) daily when stocks are traded?
The only difference in my view is the size of the shares being exchanged between the former and later owners, which is 58.2% and quite huge.
In fact, this could have been a case of merger and acquisition, which is common in the financial services sector.
So what is all the hullabaloo about?
According to records, Diageo’s story did not begin until 1997 when Guinness merged with the food and beverage wholesaler Grand Metropolitan Plc. The $15.8 billion deal went smoothly, and the two companies merged under the Diageo name.
Data from Finance.yahoo.com documents the ownership of Diageo as follows.
The top institutional holders of the stock are:
(1) Bank of America Corporation, $5.1m, 664,620,064
(2) FMR, LLC, $4.84m, 631,245,335
(3) Morgan Stanley, $2.6m, 339,179,731
(4) ClearBridge Investments, LLC, $2.35m
So what just happened with the sales and purchase of shares between Diageo and Tolaram Group is the normal course of business and nothing untoward as far as I am concerned.
Readers should please note that the institutional investors in Diageo are all European and American investment banks and enterprises.
Coincidentally, the other multinationals that have exited in the past ten years, not particularly in the one year of President Bola Tinubu’s watch, are mainly European and American firms. They range from GSK in Lagos to Proctor & Gamble in Ibadan.
So there is a pattern that has been slowly and surely unfolding quietly without the system taking notice of it.
And guess which international firms have been filling the vacuum that European and American firms are creating, Asian firms. These are mainly Indian and Chinese corporations.
In fact, there is a Chinese firm that focuses on sanitary products for adults and children like Proctor & Gamble, currently setting up a factory to fill the gap as P&G was exiting.
Just as Tolaram Group bought over Diageo’s shares in Guinness Nigeria, a consortium of Nigerian investors, Renaissance Group had acquired SHELL’s onshore assets when the British and Dutch-owned oil behemoth decided to migrate into offshore operations and remain exclusively in that space.
It is believed that the decision to operate only offshore was made to avoid the challenges that come with poor execution or lack of corporate social responsibilities resulting in the environmental mess arising from irresponsible exploration leading to exploitation of the Niger Delta oil resources that triggers agitations that manifests in the instability still wracking the region.
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If GSK and P&G had put up the companies for sale as SHELL and Diageo did, I do not doubt that Nigerian entrepreneurs would have acquired them.
What has happened in the oil/gas sector and manufacturing sector have also occurred earlier in the construction industry.
By being the continent that colonized Africa, most of the infrastructure and businesses on the continent are either operated or owned by European or American partners. That is because there was a shift from colonialism to neo-colonialism.
The infrastructure built by the colonialists in Africa includes seaports, airports, railway lines, roads, bridges, and landmark building projects. All that happened from the 1960s, 70s, 80s, and probably up to 2000 when they became less competitive with the entrance of Asian firms into the market with more business friendly pricing and terms.
Since the past two decades or so in my assessment (I do not have empirical evidence), it would appear as if Western businesses have been on a sort of retreat with Asian firms replacing them.
Apartment from Julius Berger that has become entrenched in Nigeria mainly because it is still the facility managers of Aso Rock Villa which it constructed several decades ago where are the French, Italian, and other German construction firms that once dominated the Nigerian construction landscape?
They are currently moribund and being replaced by Chinese and other Asian firms.
Who is building major airports across Nigeria, the Chinese? Which firms are resuscitating our railway lines, Chinese firms?
Who built a brand new deep-sea port in Lekki, Lagos, in a relatively short time frame, the Chinese.
Look around the skylines of Lagos and other major cities in Nigeria to see which construction firms are building the skyscrapers, Singaporean, Lebanese, and Chinese firms, not European or American outfits which used to be the case.
Considering the seriousness with which President Tinubu recently invested energy in wooing investors from the Arab world from Saudi Arabia to the United Arab Emirates, UAE, to Qatar, Middle East investors may soon turn their attention to Nigeria if Western investors lose investment appetite in Nigeria as reflected by the much-vaunted exit of GSK, P&G etc.
But one thing is sure, nature abhors vacuum. So, the chance of the departing or folding up entities would be taken over.
In the same manner that the Chinese are holding it down in railway, airports, and seaport construction in Africa and indeed Nigeria, the Indians are entrenching themselves in the information technology and pharmaceutical sectors.
In my reckoning, if a study is conducted to ascertain if there has been any real loss since the exit of GSK and P&G, amongst others, I doubt if the Asian firms replacing them would not be discovered to have created more jobs and added more to the GDP of our country.
In fact, I challenge all those opposed to the ongoing reforms by President Tinubu and cite it as the reasons that GSK, P&G, etc exited and Diageo sold 58.2% of her shares to Tolaram Group, to conduct or commission a study to prove their allegation.
PricewaterhouseCoopers, Ernst and Yong, and other international research firms that pride themselves as purveyors of corporate data, including the indigenous Nairamatrics, should make it a point of duty to unclaim or validate it.
Relying on mere trend analysis, my enlightened guess is that real economic independence is just taking place in Africa and indeed Nigeria after about 64 years of political independence of our country from Britain.
Although Nigeria has been politically independent since 1960 when the British lowered the Union Jack after granting our nation independence, neo-colonialism, which became the next level, had persisted with British and European firms running the private sector and even having a vice grip on governments.
That was the case with SHELL Nigeria, which was complicit in the Ogoni land oil exploration debacle that culminated in the execution of the environmental rights activist Ken Saro-Wiwa which became the infamous Ogoni 9 tragedy.
It is an open secret that the operations of conglomerates like GSK and P&G are managed from the London and New York headquarters of the conglomerates.
If the firms were facing headwinds perhaps owing to their high-cost structure or restricted access to foreign exchange to procure raw materials, why could their home countries, to which they have been repatriating profits over the years not avail them of some funds to tide them through the rough patch occasioned by the ongoing reforms in Nigeria that have made it a bit more difficult to repatriate funds?
The truth is that the firms have been dependent on Nigeria for the funding of their operations by depending on Nigeria’s financial services system, which is currently unstable arising from the reforms that are afoot.
That is evidenced by the withdrawal of subsidy on petrol, which has seen the cost production skyrocket; the push to harmonize the dual foreign exchange rates that hitherto encouraged arbitrage and finally the astronomical increase in electricity tariff for the so-called Band A consumers which is the last straw that broke the camel’s back as it were.
With all the above factors bearing down those firms, they realized that business was no longer as usual in Nigeria and folded up.
Perhaps, one day soon, they will return when they change their business models.
But from the way that those averse to the ongoing reforms present the exit of the conglomerates, it is as if the firms were charity organizations set up by Oxfam or USAID to save Nigerians from hunger and starvation in the manner that Band-Aid was formed by Sir Bob Geldorf in the 1980s to help raise funds to help save starving fellow human beings in the horn of Africa.
