In Support Of The Nigerian Economic Landscape

We have noticed with concern the consistent exaggeration of the number of companies ceasing operations in Nigeria or relocating abroad by various corporate sector advocacy groups and political opposition. This is often done in a derogatory manner, painting the country as having an unfavorable business environment with low scores on business facilitation….READ ALSONigerian Government Appeals To SSANU, NASU To End Warning Strike

In our assessment, these corporate advocacy groups employ this tactic to pressure the government into taking specific policy actions or reversing its stance on certain policies. For politicians, disparaging the business environment serves to undermine the credibility and effectiveness of the current administration in the eyes of the public. Unfortunately, this negative portrayal of the business climate with selective data is relative to different jurisdictions and circumstances. In other words, data are utilized for planning purposes by governments and other entities. Typically, since the data are for planning purposes, they encompass both the number of companies ceasing operations and those newly established during the same period.

Compared to the Manufacturers Association of Nigeria’s report of 767 companies closing in 2023, presented as a tool to instigate pessimism among the populace and government, the Small Business advocacy group in the United Kingdom interprets the closure of 345,000 businesses in their country as “More businesses closing down than starting up for the first time in 12 years.”

This, in our view, represents an objective interpretation of data. It is evident that the 767 companies closed in Nigeria do not come close to the 345,000 closures recorded in the United Kingdom during the same period. Nor can this number be compared to the 460,000 companies that close every quarter, or the 10,655 Micro, Small, and Medium Enterprises (MSMEs) that ceased operations in India between 2022 and 2023.

Furthermore, according to Indian data, for every 175 closures in 2022, over 11,000 new firms were established.

Given this context, it is essential that while significant attention is given to the departure of major companies like GSK Plc and Sanofi, among others, the data should also include statistics provided by the National Agency for Food & Drug Administration and Control (NAFDAC). This data indicates that 105 applications for the construction of drug manufacturing facilities have been approved across the country. Additionally, over 20 newly registered local drug manufacturers have collectively invested over $2 billion in establishing WHO-compliant facilities for producing quality pharmaceuticals and essential medicines for Nigerians.

We also observe a patronizing attitude from the usual suspects—advocacy groups and politicians—regarding the relocation of Unilever’s tea brand production to Nigeria. While such relocations should typically be business decisions, they are now politicized and sensationalized to serve the partisan interests of opposition elements and corporate advocacy groups.

From an analytical perspective, we urge a departure from this collective approach to using economic-related data, particularly in the context of nationalism and patriotism. The strength of a nation’s economy often hinges on the volume of Foreign Direct Investment (FDI) it attracts. Investors in this category meticulously assess a country’s fundamentals before deciding to explore its economic environment. Often, their decision-making is influenced by perception analysis, which compares the country with peer jurisdictions.

In light of this, investors rely on media reports, and any negative information about a country raises concerns for potential investors. Therefore, what corporate advocacy groups and politicians disseminate in the public sphere, purportedly to engage the government, actually constitutes qualitative data for business decision-making.

In reality, no economic jurisdiction can claim perfection in business facilitation, as evidenced by the data from other countries mentioned earlier. However, based on available data, Nigeria’s economic space presents several positive aspects.

Another jurisdictional comparison serves to illustrate this point. While profits at China’s industrial firms declined by 2.3 percent in 2023 for the second consecutive year, Nigeria’s National Bureau of Statistics reports a 73 percent year-on-year increase in Company Income Tax (CIT) from N2.82 trillion in the 2022 financial year to N4.89 trillion in the 2023 financial year.

This significant disparity in profits is recorded despite the persistent challenges facing the Nigerian economy. It indicates that, notwithstanding the challenges, Nigeria offers investors the best possible opportunities for return on investment. This economic achievement is something that corporate advocacy groups and politicians should celebrate.

The substantial CIT receipts into the federation account are corroborated by the performance of Nigerian-based companies on the Financial Times ranking of Africa’s 100 fastest-growing companies in 2023.

Nigeria’s impressive showing on that ranking is evidenced by the presence of 27 Nigerian companies, with two—Afex Commodities Exchange Ltd and Moniepoint Inc—leading the pack of 100 companies continentally. This provides Nigeria with 27 reasons for optimism despite the challenges the country faces.

In summary, this underscores the resilience of Nigeria’s economy, particularly in the context of forthcoming developments in 2024, attributable to the policy initiatives of President Bola Ahmed Tinubu. One such development is the buoyancy witnessed in the Nigerian stock market, which is perhaps the best-performing stock exchange in terms of capital appreciation in Africa. This momentum persists despite an increase in bond and treasury bill yields.

Looking ahead, the Nigerian Stock Market anticipates the listing of market-moving entities like Dangote Foods, formed from the merger of Dangote Sugar, NASCON Allied Industries Plc, and Dangote Rice Limited (DRL). This will result in the consumer goods giant having a market capitalization of N1.50 trillion.

Moreover, the Nigerian National Petroleum Company Limited (NNPCL), which announced its plan to issue shares through an Initial Public Offering (IPO) to investors in 2024, is poised to be another transformative entity in the economic space.