Business
Experts Sound Alarm As Company Failures Surge In Nigeria
The recent news of GlaxoSmithKline (GSK) pulling out of Nigeria sent shockwaves throughout the nation not long ago.
With a presence spanning 51 years, GSK has stood as a prominent pharmaceutical company, manufacturing renowned prescription medications, vaccines, and consumer healthcare products such as Panadol, Macleans, Andrew Liver Salt, and Amoxil.
This development has raised concerns among Nigerians for an evident reason.
Over the past decade, Nigeria has witnessed a gradual departure of multinational enterprises, paralleled by the unfortunate decline of a growing number of local businesses.
In the last five years alone, companies like ShopRite, Procter & Gamble, Surest Foam Limited, Mufex, Framan Industries, MZM Continental, Nipol Industries, Moak Industries, Deli Foods, and Stone Industries, among others, have either ceased operations entirely or partially.
Hence, the news of GSK’s imminent departure, seen by numerous Nigerians as an additional blow, has intensified concerns about the sustainability of the nation’s manufacturing industry.
These concerns are amplified by the alarming statements emerging from key figures within Nigeria’s manufacturing sector.
As previously reported the Poultry Association of Nigeria (PAN) issued a joint statement signed by its National President, Sunday Ezeobiora, and the Director-General, Onallo Akpa.
The statement expressed alarm about the surging price of maize, which is leading to the closure of poultry farms.
Likewise, Senator Walid Jibrin, a former chairman of the Textile Manufacturers Association of Nigeria, expressed his distress over the demise of 155 Nigerian textile companies within a short span of time.
Additionally, Francis Meshioye, the President of the Manufacturers Association of Nigeria (MAN), warned that the implementation of an electricity price increase could lead to more multinational companies departing from Nigeria.
In the past week, during a meeting with Ajay Banga, the President of the World Bank, President Bola Tinubu conveyed his commitment to addressing Nigeria’s challenges through his recent policy initiatives.
The nation’s economic challenges have generated deep concern among Nigerians from various sectors, prompting many to wonder why the government has struggled to control the situation.
Speaking with DAILY POST on Monday, Prof. Godwin Oyedokun, an accounting and financial development expert from Lead City University, Ibadan, placed responsibility on the government for the increasing count of business closures in Nigeria.
He asserted that if President Bola Ahmed Tinubu had established essential frameworks, including appointing ministers, within the initial 30 days of his tenure, the present economic unease might have been mitigated.
He said: “It is not only international companies exiting Nigeria, local firms, too, have collapsed. The truth is that times are hard for everyone. It isn’t easy to live and breathe in Nigeria today. I don’t want to be part of those criticising the current regime, but the blame is on them because they knew the problems of this country from day one.
“I expected Tinubu’s administration to stabilise governance, but that is not the case. Assuming the political offices have been filled, the anxiety in the economy will have been reduced. People do business to expect profit in returns, but collapse is imminent if that is not the case.”
Prof Oyedokun recommended that a general palliative by way of reduced tax should be given to the working population and firms.
He said “I would love a situation where the government reduces personal income tax. The government cannot guarantee the salaries of private companies, but it can lower personal and company income taxes. So that companies and individuals can breathe, that would have a general palliative that would cut across the working populace,”
The Director of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, who also spoke on the tough situation in which manufacturing companies found themselves, pointed an accusing finger at the Central Bank of Nigeria (CBN).
He said: “The revaluation of foreign exchange liabilities amid the reforms in the forex market would predictably result in the current outcomes for companies with significant foreign exchange obligations.
“It is a question of the crystallisation of exchange rate risk. It is quite predictable. Using an exchange rate of N460 to the dollar to value these forex exposures over the past few years was purely academic. The reality is what is unfolding now.” It added
Savannah Energy has shared a trading update on its Nigerian operations and other markets in Africa, including up-to-date cash collections in its Nigerian business.
According to the update, made available on Thursday in Lagos, its gross production in Nigeria averaged 23.1 Kboepd for FY 2024, broadly in line with the prior year’s 23.6 Kboepd, of which 88% was gas (FY 2023: 91%).
On the update, CEO of Savannah Energy, Andrew Knott, said, “I am pleased to provide a FY trading update which demonstrates the continued progress we have made in 2024, a year which saw the highest level of cash collections ever recorded by our Nigerian business. 2025 is expected to be an exciting year for our Company: we have a large planned operational programme in Nigeria which is anticipated to enhance both our oil and gas production levels and capacity; we intend to progress our R3 East oil development project in Niger; we continue to pursue key acquisitions in the upstream oil and gas space; and we continue to seek to build our power business.
“Fundamentally, Savannah remains unequivocally an “AND” company, seeking to deliver strong performance both for the short AND long term across multiple fronts, and pursuing growth opportunities in both the hydrocarbon AND power sectors.”
The update It also shows that it generated a Total Income of US$393.6 million in 2024, compared to FY 2023’s US$289.8 million. This consists of Total Revenues of US$258.7 million and Other operating income of US$134.9 million.
The report also shows that Savannah’s FY 2024 Total Revenues were ahead of the previously issued financial guidance of greater than US$245 million, while FY 2024 financial guidance is reiterated for Operating expenses plus administrative expenses at ‘up to US$75 million’. The company expects its FY 2024 capital expenditure to come in lower than planned (previously guided at ‘up to US$50 million’) due to the phasing of spend.
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According to the update, Savannah’s cash collections in 2024 amounted to US$248.5 million, a slight increase from the US$206 million it received in 2023. The report further shows that its cash balances as at 31 December 2024 stood at US$32.6 million, compared to the 31 December 2023 figure of US$107.0 million.
The report shows that the company’s midstream subsidiary, Accugas Limited, had as at 31 December 2024 drawn down on its NGN332 billion of the NGN Transitional Facility, with the resulting funds being converted to US$, which, along with cash held, was used to partially prepay the existing Accugas US$ Facility, leaving a balance as at 31 December 2024 of approximately US$212.3 million.
The report also provided new updates on Accugas’ US$45 million Uquo Central Processing Facility (“Uquo CPF”) compression project in Nigeria, noting that its commissioning which will enable the expansion of gas production in the medium term is well underway.
The report highlighted the progress being made in the procurement process of long lead equipment in Nigeria for a potential two-well drilling campaign on the Uquo Field in H2 2025, with an additional gas development well expected to add up to 80 MMscfpd of supplemental production capacity and a potential exploration well targeting an Unrisked Gross gas initially in place (“GIIP”) of 154 Bscf (25.7 MMboe) of incremental gas resources.
The update shows that progress is also being made in the planned Savannah acquisition of Sinopec International Petroleum Exploration and Production Company Nigeria Limited, whose principal asset is a 49% non-operated interest in the Stubb Creek oil and gas field (“Stubb Creek”), with regulatory approval and completion being targeted in Q1 2025. Following the completion of the acquisition, Savannah intends to commence an expansion programme which is anticipated to increase Stubb Creek gross production from an average of 2.7 Kbopd in 2024 to approximately 4.7 Kbopd.
In Niger, Savannah continues to seek to progress its 35 MMstb (Gross 2C Resources) R3 East oil development in South-East Niger, while it continues to push for a potential alternative transaction structure to acquire a material stake in producing oil and gas assets in South Sudan as previously announced on 20 December 2024.
On the renewable energy front, the update shows that Savannah has up to 696 MW of renewable energy projects currently in motion, including the up to 250 MW Parc Eolien de la Tarka wind farm project in Niger and the up to 95 MW Bini a Warak hybrid hydroelectric and solar project in Cameroon. A firm believer in Africa’s transition to renewable energy, Savannah continues to target a portfolio of up to 2 GW+ of power projects in motion by the end of 2026.
The Nigerian Economic Summit Group (NESG) has projected that the country has the potential to achieve a 5.5% growth in Gross Domestic Product (GDP) if critical policy reforms are sustained.
This was disclosed on Thursday during the launch of the NESG’s 2025 Macroeconomic Outlook report.
Speaking at the event, the Chief Economist and Director of Research & Development at NESG, Dr. Olusegun Omisakin, highlighted the need for more efficient policy implementation to unlock Nigeria’s economic potential.
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“We believe at the optimal level, if we embark on more efficient policy reforms, the Nigerian economy has the potential, the GDP to end up at 5.5 per cent, and we believe that this is achievable,” Omisakin stated.
More to follow……….
The Central Bank of Nigeria (CBN) has announced the release of the Nigerian Foreign Exchange (FX) Code, a set of guidelines designed to promote ethical conduct among authorized dealers in the country’s FX market.
In a statement, the apex bank disclosed that the official launch of the Code would take place on Tuesday, January 28, 2025, at the CBN Head Office Auditorium in Abuja.
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“The Central Bank of Nigeria has approved the release of the Nigerian Foreign Exchange (FX) Code as a guideline to the banking industry to promote the ethical conduct of authorised dealers in the Nigerian Foreign Exchange Market,” the statement read.
The introduction of the FX Code is expected to enhance transparency, accountability, and professionalism within Nigeria’s foreign exchange ecosystem, aligning it with global best practices.
The event is anticipated to attract key stakeholders in the financial and banking sectors, as well as representatives from authorized FX-dealing institutions across the country.
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