OPS raises alarm over surge in capital flights, business closures

The organised private sector, OPS, in Nigeria have hinted of worsening operating environment which has forced increased exit of multinational corporations and capital flight from the economy.

The OPS groups which included Nigerian Association of Chambers of Commerce Industry Mines and Agriculture (NACCIMA) and Lagos Chamber of Commerce and Industry (LCCI) and  Nigeria Employers’ Consultative Association, NECA, in separate communications with Vanguard yesterday, also  said the situation has induced more business failures and closures across all sectors of the economy.

The concerns were coming against the backdrop of the recent exit of GlaxoSmithKline Plc, a leading healthcare multinational, from the country.

The National President of NACCIMA, Dele Kelvin Oye, and Director General, LCCI, Dr. Chinyere Almona, who conveyed the concerns of the nation’s private sector in a separate statements made available to Vanguard, made particular reference to the recent announcement by GlaxoSmithKline to exit Nigeria.

They urged the government to urgently review the short-term impact of its economic policies with a view to reversing the trend of companies leaving the country.

Also the NECA raised the alarm over increasing incidences of divestments, capital flights, and business closures in Nigeria, pleading with the Federal Government to urgently address anti-growth, ill-timed, or not-well thought-out policies weighing down businesses.

The umbrella body for employers advised the Federal Government to work collaboratively with the private sector with the view to developing and implementing action plans capable of promoting enterprise sustainability and competitiveness.

In a statement shared with Vanguard, Oye said: “The recent announcement of GlaxoSmithKline’s exit from Nigeria has dealt a major blow to the country’s manufacturing sector, which is already experiencing significant collapse amongst its local businesses.

“While the current administration has commendably set Nigeria on a long-term path to economic progression, it has been noted that some of the immediate positive economic policies of President Ahmed Tinubu have had an adverse effect on certain sectors of the country. In particular, the sudden rise in the price of petrol and abolition of the official naira rate has caused a significant backlash, eroding the already earned income and trading capital of several multinational companies that had established their previous earnings based on the official naira rate at the time.

“As a result, there has been a steady exodus of multinational companies and the collapse of several local companies, resulting in significant job losses and economic damage.

“It is crucial for the government to take urgent action to reverse the trend of companies leaving Nigeria and restore confidence in all sectors of the economy.”

In her statement, Almona said: “The decision by GlaxoSmithKline to shut down its operations in the country after over five decades is one of the many decisions multinational firms have had to make in recent years with their adverse effects on the economy. “Despite presenting international businesses with the largest market in the continent, the nation still suffers from worrying economic slow-down decisions like this, which are often provoked by the rising cost of doing business, exposed by the epileptic power supply, and weak infrastructural backing, amongst others.

“The chamber is inclined to suggest the government take a holistic view/ review of the business environment and take steps to make the nation’s business clime more competitive for growth.”

NECA, in the statement, said, “The recent trend of business relocation and divestment is unfortunate. Over the last decade, the private sector has been adversely affected by various policy thrusts of the Government. Many of these policies were anti-growth, ill-timed, or not well thought out, while others were not in alignment with the country’s economic realities. “Operational costs have increased astronomically, heaping more woes on many companies.

“The consequences of the years of wrong policy choices are not far-fetched. As expected, divestment, capital flight, and outright closures have become the “new normal” within the business community. This is one of the chief reasons why the rate of unemployment continues to soar perpetually with a consequential rise in crime and other security issues. When businesses cease operations, divest, or move to other profitable and hospitable environments, a large number of Nigerians become unemployed. Inadvertently, the country loses income from taxes, social investment is hindered and poverty holds sway”.

  “It is germane to state that Government must take urgent steps to arrest this predicament. While we acknowledge and commend the current administration’s effort to address the concerns of the Private Sector and the steps it took to provide some respite to businesses in specific sectors of the economy, more needs to be done. “Beyond the tax reforms activity and the provision of palliatives to select corporate entities, Government should, by deepening engagement with the Organized Private Sector provide the right intervention and incentive not only to attract more Foreign Direct Investment (FDI), but to also prevent more companies from shutting down, divesting or leaving the country”.

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