Will Companies Stop Leaving Nigeria? Indian steel maker Aarti Joins the Train

Several multinationals have packed up their operations in Nigeria, and Indian steel manufacturer Aarti has now joined the list. Based in Ota, Ogun State, Aarti Steel has been put up for sale, signaling another blow to Nigeria’s industrial sector amid ongoing economic struggles.

In 2017, Aarti invested between $20 million and $30 million to establish a 120,000-capacity cold-rolled mill in Ota, intending to support Nigeria’s downstream sectors, including the production of home appliances and metal furniture. 

This is after the departure of other significant players like Microsoft Nigeria, Total Energies Nigeria, PZ Cussons Nigeria PLC, Kimberly-Clark Nigeria, and Diageo PLC all of which exited in the first half of 2024. 

The trend of these companies leaving Nigeria raises alarming questions about the future of foreign investment in Africa’s most populous nation. It prompts a critical question facing economic strategists and policymakers: Will companies stop leaving Nigeria, or is this the beginning of a more extensive exodus?

Aarti battles economic pressures 

Aarti’s decision to sell comes amidst a backdrop of harsh economic realities, including soaring debt levels, a faltering economy, rampant inflation, a weakening currency, and high energy costs. 

These factors collectively contribute to a challenging business environment, prompting companies to reconsider their operational viability in Nigeria.

Sources close to the matter, speaking on condition of anonymity, revealed that bids for the steel maker are currently being placed, with figures ranging between $50 million and $100 million. 

Among the bidders are notable industry players like African Industries and Bharti, indicating a possible competitive acquisition process. The management of Aarti aims to transition the company into the hands of a credible investor within the coming months.

What this means for the country

The departure of Aarti is not just a significant economic event but also a symbolic marker of the broader corporate disenchantment with the Nigerian market. 

Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, commented on the situation, emphasizing the dire implications for employment and Nigeria’s attractiveness as an investment hub.

“The continuous exiting of multinationals from the economy is a serious cause for concern,” Yusuf stated. “It has a negative implication for employment and the country’s perception as an investment destination.”

The string of departures poses a critical challenge to Nigeria’s ambitious goal of reaching a $1 trillion GDP. It undermines not only the economic fabric but also the morale of local businesses and potential investors watching these developments unfold.