Exit of multinational firms due to high inflation, currency weakness – Deloitte

• Posted on January 8, 2025January 8, 2025
• by Nana Kwesi Coomson
• Comment

Professional services firm, Deloitte, has revealed that the exit of multinational companies in Nigeria and Ghana is due to rising inflation, dollar illiquidity and currency weakness.

It disclosed in its ‘Sneak Preview of 2025’ that the consumer industry will continue to grapple with the effects of rising inflation, characterised by escalating costs of goods and services, eroded purchasing power, and shifting consumer priorities.

“In Nigeria, the high inflation rate partly attributed to the exits of some multinational companies (Procter and Gamble, GSK, Bolt Food) from the market due to rising operational costs, amongst others. Other factors that contributed to the exits of these multinationals include the dollar illiquidity and the sharp naira depreciation/ currency volatility”.

However, in quarter 4, 2024, the naira recorded some stability against the US dollar.

Deloitte said while this is expected to continue in 2025 and impact positively on consumer and investor sentiment, coupled with the ongoing tax reforms by the government, a further exodus of multinationals may occur especially if the high inflation and high-interest rate environment persist.

In Ghana, a similar situation occurred with about eight firms leaving the shores of the country in late 2023 and 2024 respectively.

Brands such as Glovo, Nivea, Jumia Foods, Dark and Lovely, Bet 365 and Game all exited Ghana.

Dark and Lovely cited the challenging economic environment and rapid changes in the beauty industry as reasons for its departure. Jumia also shut down its food delivery due to unsustainable market conditions and economic factors.

Implications

To remain competitive, Deloitte said many companies will adopt strategies such as miniaturization or sachetisation of products in smaller quantities to align with consumers’ strained budgets.

“This trend is likely to intensify as firms strive to address affordability concerns while maintaining market share”, it pointed out.

It concluded that businesses will leverage localization strategies to adapt, offering affordable alternatives and embracing cost-cutting measures to sustain operations and meet consumer needs.

-Myjoyonline