In contrast, other corporate giants are pulling out altogether, or outsourcing local distribution amid the country’s currency crisis and other longstanding challenges, including widespread poverty, corruption and at times unpredictable actions by regulators. 

The different strategies reflect the promise and peril of Nigeria’s consumer market: With a median age of just over 18 years, Nigeria’s population is projected to nearly double to around 400 million people by 2050—surpassing the U.S. to become the country with the third-biggest population in the world after India and China. 

But Nigeria is also an extraordinarily difficult place to turn a consistent profit. The country is suffering from a plummeting local currency, soaring inflation and crippling dollar shortages that have prevented companies from repatriating returns. Some, such as Walmart, have left altogether, and others like U.K.-based pharmaceutical giant GSK have outsourced their local businesses.

“Retailers always talk about the population advantage, [but] when they get there, they always get shocked by the dollar challenges,” said Achumile Mashalaba, an analyst at South African fund manager Ninety One

Nigeria’s currency, the naira, has plunged around 70% against the dollar since June, when the country’s president, Bola Tinubu, said the central bank would no longer prop it up by rationing access to dollars. The move was supposed to make it easier for businesses to operate in the country, but in reality many companies are still struggling to obtain dollars from the central bank to pay for imports or transfer local profits into hard currency.

“You’ve basically halved revenue, while costs remain the same,” Mashalaba said. “It changes the investment case for a lot of these companies.”

The main reason for the continued dollar shortages is a sharp drop in Nigeria’s oil production, which has fallen by about a third over the past 15 years. Nigeria gets more than 90% of its foreign exchange from selling oil. 

‘Market of the future’

To contain their need for dollars and cut their risks from a tumbling naira, some multinational companies have opted to cut imports and rely more on locally made ingredients.

Unilever Nigeria, the local subsidiary of the Anglo-Dutch consumer goods company, last year stopped selling its OMO laundry detergents, Sunlight dishwashing products and Lux soap that required it to spend dollars on importing ingredients for lower-profit brands.

Instead, Unilever’s current product range in Nigeria is much more focused on foods, such as Knorr bouillon cubes and seasonings, and hygiene products like Vaseline or toothpaste, which are among its most profitable and where most ingredients can be sourced locally. 

Unilever Nigeria now makes its Pepsodent toothpaste with sorbitol derived from Nigerian cassava roots, instead of importing the ingredient from China, which is used to sweeten, bind and prevent toothpaste from drying out. Across Africa, Unilever is buying 70% of its ingredients from the continent, compared with one-third in 2019, drastically reducing its need for U.S. dollars and other hard-to-obtain currencies.

Tim Kleinebenne, Unilever Nigeria’s managing director, says it is worth making those extra efforts to keep a foothold in the country for when the economy improves.

“Nigeria is a market of the future,” he said. “Whatever short-term effect you’re going to face…if you want to grow, you have to be in Nigeria.”

Guiness Nigeria —part of London-based spirits maker Diageo—will stop importing Johnnie Walker, Baileys and other international premium spirits in April. Guinness will focus on drinks that it says are more tailored to the Nigerian market, including Orijin, a bittersweet mixed drink flavored with African herbs and fruits, and Snapp, an apple-flavored alcoholic drink marketed at women.

Guinness Nigeria’s decision to drop some of its most well-known products, including Singleton, from its inventory came after it recorded a 18.2 billion naira loss in the 12 months ended June 30, equivalent to about $23.9 million at the time, compared with a year-earlier profit of 15.7 billion naira, largely a result of the devaluation of the currency.

Nestle Nigeria, the local subsidiary of the Swiss food-and-beverage giant, also said the currency swings contributed to a 50 billion naira loss during that same period, compared with a profit of 27.8 billion naira a year earlier. 

Nestlé has been working with local suppliers for the past four years to develop high-quality cassava flour to replace imported cornstarch, used in its popular Maggi stock cubes. Nestlé is also considering training for farmers who can supply locally made vegetables and spices, such as onion powder and turmeric, for its Maggi stock cubes and flavor powder.

Companies pare Nigerian footprint

Consumer-products giant Procter & Gamble —a rival to Nestlé and Unilever—made a different choice. The U.S.-based company announced in December that it would shutter its last operational manufacturing plant in Nigeria, which made laundry detergent, and has reverted to importing all its products. 

“There’s really no best approach now,” said Dumebi Oluwole, senior economist at Stears, a Lagos-based data-analytics firm. “Companies are just trying to manage their risk. The importance here is that they stay afloat and weather this economic storm.”

Oluwole says that by importing only finished goods, and not raw materials, companies such as P&G can pick and choose the products that work best for them in the current market environment, likely items that appeal to the massive lower-middle-income market.

Pharmaceutical company GSK said in August that it was outsourcing its more than 50-year-old business in Nigeria. The company’s local subsidiary has delisted from the Nigerian Stock Exchange, and GSK now relies on distributor World Wide Commercial Ventures to pick up GSK products, such as vaccines for human papillomavirus and hepatitis B, from manufacturing sites and sell them to pharmacies and hospitals in Nigeria. Previously, GSK handled the entire supply chain.

Difficulties accessing foreign currency had at times led to shortages of GSK medicines and vaccines in Nigeria. If the new structure works as intended, a GSK spokesman said, it should lead to more consistent supplies of these important drugs.

Other companies are pulling out.

Walmart’s African subsidiary Massmart closed its five stores in Nigeria at the end of 2022 after failing to find a buyer for them.

Multinational oil companies are also reducing their footprint in Nigeria—potentially further hurting oil production and the availability of foreign currency. 

TotalEnergies in February became the latest oil major to announce it was looking to sell its onshore oil operations in the Niger Delta, where rampant theft and sabotage have led to spills, expensive repairs and lawsuits against Western companies.  Shell, Exxon Mobil, and Italy’s ENI have recently struck deals to sell their Nigerian onshore and shallow-water businesses, mostly to smaller Nigerian companies, but have held on to their offshore operations.