Following the footsteps of GlaxoSmithKline (GSK) and PZ Cussons Nigeria, pharmaceutical giant Sanofi-Aventis Nigeria Limited has announced its impending exit from Nigeria. The French multinational, recognized for its production of polio, influenza, meningitis, and rabies vaccines, attributes this strategic shift to mounting challenges in the Nigerian business landscape.
In a letter dated November 7, 2023, addressed to stakeholders, the company unveiled its plan for a “transformative” business model, set to take effect in February 2024. Sanofi-Aventis Nigeria states that this new approach involves adopting a third-party model for the distribution of its products in the country, a move reminiscent of recent decisions by other corporate entities.
The pharmaceutical company has been operational in Nigeria for over four decades but has chosen to transition to a third-party distribution model. This decision aligns with a broader trend seen in the departure of major corporations from Nigeria, evident in GSK’s similar move four months prior.
While these corporate giants present their exits as strategic transformations, a closer look reveals a response to the challenging economic environment in Nigeria. The current administration, under President Bola Ahmed Tinubu, has implemented economic reforms with unintended consequences, causing hardships across various sectors.
The depreciation of the Naira, triggered by a mid-June decision allowing it to trade more freely against the dollar, resulted in a 40% devaluation. This move compelled MultiChoice, GSK, and now Sanofi-Aventis Nigeria, to reassess their business strategies. The challenges extend beyond currency woes, as South Africa experiences power outages, contributing to declines in the number of active days per subscriber.
Several major companies, including Dangote Sugar Refinery Plc, Dangote Cement Plc, MTN Nigeria Communications Plc, and others, have recorded significant losses due to currency revaluation. The Central Bank of Nigeria’s Naira floatation policy, implemented on June 14, 2023, has led to a sharp drop in the Naira’s value against the dollar, reaching N776.79/US$1 by September 2023.
These unforeseen economic consequences, coupled with hyperinflation approaching 30%, deteriorating Naira exchange rates, weakened consumer purchasing power, and widespread insecurity, have created an uncertain business environment. Sanofi-Aventis Nigeria’s decision to exit further underscores the growing concern among companies about the viability of their operations in Nigeria, mirroring a broader trend of businesses leaving the country.
