Connect with us

Business & Money

Multinationals Retreat from Africa: Challenges in Kenya, SA, Nigeria

The depreciating value of currencies has made it increasingly challenging for multinationals to repatriate profits. In the past decade, Nigeria’s naira has fallen by 88% against the dollar, while the Kenyan shilling has decreased by 34%, and the South African rand has seen a decline of 44%.

Published

on

The departure of multinationals is particularly noticeable in Kenya, South Africa, and Nigeria—three countries that are often the first choice for investments in the region. Collectively, they account for 44% of sub-Saharan Africa's economy and around 30% of its population.

Explore why multinationals like Nestlé and Unilever are retreating from Africa due to economic challenges in Kenya, South Africa, and Nigeria

Nestlé SA announced the cessation of production for Nesquik chocolate milk powder in South Africa in August 2023, attributing this decision to declining demand.

A year prior, Unilever Plc halted the manufacturing of home-care and skin-cleansing products in Nigeria to “sustain profitability.”

Pharmaceutical giants Bayer AG and GSK Plc have also outsourced the distribution of their products to independent firms in Kenya and Nigeria.

Over the past few decades, numerous top multinationals have flocked to Africa, attracted by rapid growth, youthful populations, and rising wealth.

 However, recent challenges—including plummeting currencies, excessive bureaucracy, unreliable power, and congested ports—have diminished the region’s appeal.

 “It doesn’t justify the effort,” remarks Kuseni Dlamini, a former chairman of Walmart Inc.’s African unit, who now leads the American Chamber of Commerce in South Africa. “This should be a wake-up call to African authorities. If you do not have a conducive environment to grow and scale businesses, you will be left by the wayside.”

The retreat of multinationals is most evident in Kenya, South Africa, and Nigeria, the trio of countries typically targeted for initial ventures into the region. Together, they represent 44% of sub-Saharan Africa’s economy and approximately 30% of its population.

This hesitation to expand or maintain current operations frustrates African leaders striving to alleviate unemployment and lessen their dependence on commodities as economic drivers. 

President William Ruto of Kenya has stated that manufacturing could elevate the country to middle-income status by 2030, yet poor infrastructure and growing regulation have undermined competitiveness and stunted economic growth. Nestlé, which had contemplated increasing production in Kenya, is instead scaling back operations at its sole facility there.

 While it will continue producing select items like Maggi noodles, it is downgrading parts of the facility to package imported foods like Cerelac baby cereal.

In January 2024, Neumann Gruppe GmbH, the world’s largest coffee trader, announced plans to shut down its Kenyan mill and a unit that provided financial and marketing support to small farmers, retaining only its operation that sources coffee beans for export.

The company noted that jobs would be lost, although it did not specify the number, attributing this move to a 2022 government decree that barred companies from both marketing coffee and grinding the beans, compelling them to choose one or the other.

Companies in Kenya are also grappling with increased taxes, particularly a levy on imports of essential raw materials such as cement, metals, and paper.

 The Kenya Association of Manufacturers reported that last September, 53% of its members were operating at a quarter of their capacity or less, with 42% anticipating job cuts within six months.\

 “All the numbers are negative,” stated Anthony Mwangi, CEO of the Kenya Association of Manufacturers, which represents both domestic and foreign firms. “Those spaces that were used for production, now they are empty spaces. There are warehouses that are importing the same stuff.”

Since 2016, major South African retailers like Mr Price, Shoprite, and Truworths have exited Nigeria, a market they once prioritized for international growth.

 Last year, Unilever ceased production of Omo washing powder, Sunlight dishwashing liquid, and Lux soap in Nigeria, opting instead to import these products. In March, Nestlé’s local unit reported its first nine-month loss in twelve years following a significant decline in the local currency.

In South Africa, the continent’s most advanced economy, the once-praised infrastructure has deteriorated.

 Power outages have become nearly daily occurrences, while water shortages are rising, with up to 40% of water lost to leaks in some urban networks.

 Multinationals have also pointed to a convoluted work permit system that complicates the hiring of foreign executives.

 The South African-German Chamber of Commerce stated last year that delays were jeopardizing operations owned by German companies responsible for 100,000 jobs in the country.

 “The visa matter spans the entire hierarchy of German business in South Africa,” the group said in a statement. “This is of course not only a concern to German business but also to the country itself.”

The regular production interruptions and the scaling back of manufacturing pose significant challenges for local retailers.

 Shoprite Holdings Ltd., Africa’s largest supermarket chain, has had to ramp up its stockpiles to prevent empty shelves, and is constructing additional distribution centers to accommodate more goods.

 “This gives you an idea of how constrained the supply chain is,” noted Shoprite CEO Pieter Engelbrecht. “There’s very little investment in production capacity in South Africa amongst the manufacturers, and the multinationals have completely stopped.”

The declining value of currencies has further complicated multinationals’ ability to repatriate profits. Over the past decade, Nigeria’s naira has depreciated by 88% against the dollar, while the Kenyan shilling has weakened by 34%, and the South African rand has dropped by 44%.

 This has resulted in diminished spending power for residents, especially concerning imported goods or those containing foreign components.

 In response, local manufacturers are increasingly providing more affordable alternatives that replicate global brands.

South Africa’s Bliss Brands (Pty) Ltd. has long marketed its MAQ washing powder in poorer townships surrounding major cities.

 Today, this brand is increasingly available at Shoprite’s Checkers outlets and Pick n Pay Stores in affluent suburbs—priced nearly 30% lower than Unilever’s Omo and Skip detergents.

 While MAQ hasn’t always been the cheapest option compared to international competitors, it has managed to keep price increases in check, according to Moaz Shoaib Iqbal, a director at Bliss. 

“Our structure is more nimble,” he explained. Multinationals are “relying on the equity of their brands to carry them through.”

This retreat has opened the door for lower-cost producers from other emerging nations to challenge the dominant brands with their own manufacturing facilities in Africa.

 In Nigeria, locally produced diapers from a Turkish manufacturer are beginning to outpace Procter & Gamble Co.’s Pampers, while a ramen product from a Singapore firm is displacing Nestlé’s Maggi noodles.

 “In Africa, the market for pricier items is dwindling,” said Alec Abraham, an analyst at Sasfin Securities in Johannesburg. “We are seeing a shift in ranges to suit more basic needs, which means fewer items as manufacturers match their ranges to income levels.”

 Keywords: Multinationals: Africa: Economic challenges:Kenya: Unilever.

Charles Wachira, Managing Editor of businessworld, has disproportionately worked as a foreign correspondent in Nairobi, Kenya. Formerly an East Africa correspondent with bloomberg, covering the business beat he has since been published by a legion of other authoritative global news platforms including Global Finance Magazine, Toward Freedom, Earth Island Journal, and Dialogue. earth and so on. He is also a co-author of, Success to Significance, a biography of pre-eminent global industrialist and renowned philanthropist Dr. Manu Chandaraia. He’s an alumnus of the University of Nairobi and Nairobi School.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business & Money

Patricia Ithau: CEO of WPP-Scangroup, Leading Africa’s Marketing Giant

Patricia Ithau was honoured with the Head of State Commendation in 2020 for her impactful contributions to Kenya’s economic growth and business development. As an accredited executive coach and certified Emotional Intelligence practitioner, she remains dedicated to nurturing future leaders who champion emotional intelligence and holistic leadership

Published

on

Patricia Ithau, CEO of WPP-Scangroup, combines visionary leadership with a commitment to social sustainability. Her journey from L'Oréal Africa to heading sub-Saharan Africa's largest marketing group reflects her dedication to empowering women in leadership and fostering future business leaders, driving meaningful progress across Africa's corporate landscape.

: She leads WPP-Scangroup PLC, the largest marketing and communication group in sub-Saharan Africa, driving innovation, business growth, and social impact across the region.

Patricia Ithau leads WPP-Scangroup PLC, the largest marketing and communication group in sub-Saharan Africa. She took over as CEO on March 14, 2022, succeeding Bharat Thakrar at the helm of this Nairobi Securities Exchange-listed company.

Under her visionary leadership, WPP-Scangroup continues to redefine the marketing and advertising landscape in East Africa through a multi-agency, multi-disciplinary approach.

 Her focus on pushing the boundaries of creativity and innovation has positioned the company to drive growth and deliver groundbreaking solutions across the region.

Early Life and Academic Foundation

Patricia’s leadership journey grew from a strong academic foundation.

Patricia Ithau studied at Loreto Convent Msongari in Nairobi before earning her Bachelor of Commerce degree from the University of Nairobi.

Further expanding her knowledge, she earned an MBA in Strategic Management from the United States International University-Africa. 

She also completed advanced management programs at prestigious institutions like Strathmore University, IESE Business School, INSEAD, and Oxford University, laying the foundation for a distinguished career in business leadership.

Career Milestones: L’Oréal Africa and Beyond

Before joining WPP-Scangroup, Patricia was the founding CEO of L’Oréal Africa, where she significantly drove the company’s growth and success in the region.

Under her leadership, L’Oréal’s African subsidiary generated $25 million in annual revenue, employed over 270 people, and produced 40 million units annually. 

One of her key achievements was leading one of the first acquisitions of a local business by a multinational in East Africa, demonstrating her ability to drive growth and market penetration in the competitive FMCG sector.

Advocacy for Women in Leadership

Patricia has actively championed women in leadership, advocating for creating opportunities that allow women to thrive in the corporate world.

As an Ambassador for the Women on Boards Network (WOBN) in Kenya, she has worked to elevate women into leadership positions.

 She holds board positions at organisations such as ABSA Bank Kenya, Jambojet Ltd, Vivo Fashion Group, and the British Chamber of Commerce.

 Furthermore, Patricia actively supports corporate governance and social impact as a Trustee for the Vodafone Foundation (UK) and the M-PESA Foundation.

Overcoming Personal Challenges and Building Resilience

In addition to her professional achievements, Patricia’s journey has been marked by resilience. 

She was crowned Miss Kenya in 1986 during her first year at the University of Nairobi. 

Navigating societal judgments and stereotypes during this period helped shape her leadership abilities, teaching her invaluable lessons in self-confidence and perseverance.

Recognition and Awards

Patricia’s contributions to Kenya’s economic growth and development have not gone unnoticed.

 In 2020, she was awarded the Head of State Commendation (HSC) for her outstanding role in business development.

 Patricia is also an accredited executive coach and certified Emotional Intelligence practitioner, emphasising her commitment to fostering future leaders who embrace emotional intelligence and holistic leadership practices.

Corporate and Social Impact

Patricia’s leadership extends beyond the corporate world. 

As East Africa Regional Director for the Stanford Institute for Innovation in Development Economies (SEED), Patricia has driven sustainable business growth and job creation across sub-Saharan Africa. 

Through SEED, she has supported over 200 businesses in tackling leadership challenges and fostering innovation, contributing significantly to the region’s economic transformation.

Family and Personal Values

Patricia is also deeply committed to her family. 

She proudly raises her two daughters, Mueni and Makena, instilling in them the values of hard work and resilience.

 Her role as a mother aligns with her broader mission of mentoring and guiding the next generation of leaders.

Conclusion: A Legacy of Leadership and Innovation

Patricia Ithau leads with vision, innovation, and a strong commitment to social sustainability, from her strategic achievements at L’Oréal Africa to her current role as CEO of WPP-Scangroup.

 Her dedication to advancing women in leadership, her contributions to the business community, and her efforts in developing future leaders make her a lasting influence on Africa’s corporate sector, inspiring and driving progress across the region.

Continue Reading

Leadership

Dr Peter Ndegwa Leads East Africa’s Top Company by Market Value

Dr. Peter Ndegwa leads Safaricom’s enterprise expansion, driving innovation in cloud services, cybersecurity, and IoT to empower sectors like healthcare and education, shaping Kenya’s digital economy.

Published

on

Dr. Peter Ndegwa exemplifies Safaricom’s commitment to long-term growth, balancing local insights with a global vision to drive transformative impact across Kenya and beyond.

: Discover how Safaricom, East Africa’s top company by market cap at $5.5 billion, continues to lead the region’s telecom sector under visionary CEO Dr. Peter Ndegwa.

Since taking the helm at Safaricom PLC in April 2020, Dr Peter Ndegwa has steered the telecommunications giant into a new era of growth and transformation.

 Safaricom, best known for M-PESA, its groundbreaking mobile payment platform, has continued to evolve under Ndegwa’s leadership, further cementing its position as a key player in Africa’s digital economy.

 Known for his strategic focus and innovative mindset, Ndegwa has achieved a series of significant milestones that reflect both his dedication to Safaricom’s mission and his responsiveness to the demands of a fast-changing industry.

In 2024, Safaricom made headlines by reducing Ndegwa’s annual bonus by KSh62 million.

 This decision, though surprising, aligns with the company’s broader strategy of reinvesting in expansion, especially in Ethiopia.

 Safaricom’s entry into Ethiopia, one of Africa’s most untapped telecom markets, is a major achievement under Dr. Ndegwa’s leadership, requiring substantial capital and adept navigation of regulatory hurdles.

 By 2024, Safaricom Ethiopia had attracted 4.6 million subscribers, a feat that not only signals the potential of this market but also demonstrates the resilience and agility that Ndegwa has instilled within Safaricom.

 The bold decision to channel resources into this high-stakes venture underscores the company’s commitment to long-term growth over immediate executive rewards, signalling a strategic shift towards sustainable development.

Central to Dr Ndegwa’s vision has been the continued evolution of M-PESA, which he expanded into a comprehensive financial ecosystem through integrations with global platforms and the introduction of the M-PESA Super App.

 This app, with a variety of mini-apps catering to different services, has strengthened M-PESA’s position as a pillar of financial inclusion across East Africa. 

Safaricom’s commitment to enhancing digital financial services has driven up transaction volumes and revenue, making M-PESA a vital part of Kenya’s economic framework and a model for other markets looking to bridge financial access gaps.

Ndegwa has also championed digital transformation through products that respond directly to customer needs.

 The Safaricom MyCounty app, launched in partnership with county governments, is one of these innovations. By offering essential services through mobile, the app represents Dr Ndegwa’s commitment to customer-centric innovation, further reinforcing Safaricom as a digital solutions leader.

Beyond consumer services, Dr Ndegwa has prioritised the expansion of Safaricom’s enterprise segment, offering technology solutions such as cloud services, cybersecurity, and IoT to various sectors including healthcare and education.

 This growth in enterprise offerings reflects Safaricom’s role as an enabler of Kenya’s digital economy, diversifying revenue streams while positioning itself as a trusted partner for businesses.

On the technology front, Ndegwa oversaw the rollout of Kenya’s first 5G network in 2021, expanding its reach to multiple cities.

 This advancement not only offers faster, more reliable internet but also lays the foundation for future innovations across sectors, reinforcing Safaricom’s competitive edge in data services.

Social responsibility is a key component of Dr Ndegwa’s approach. Safaricom, under his leadership, has committed to becoming a net-zero carbon emitter by 2050, setting a new standard for corporate sustainability in Kenya.

 Safaricom’s programs in education, healthcare, and economic empowerment have further cemented its brand as a socially responsible organisation that contributes meaningfully to society.

Despite challenging economic conditions, Dr Ndegwa has maintained Safaricom’s strong financial performance by focusing on operational efficiency and product innovation. 

His resilience and adaptability have enabled Safaricom to thrive amid inflation and currency fluctuations, with M-PESA and data services driving revenue growth.

In recognition of his accomplishments, Ndegwa received an Honourary Doctorate in Business Management from Meru University in October 2024, where he also serves as Chancellor.

 This accolade reflects his contributions not only to Safaricom but also to Kenya’s business landscape, underscoring his commitment to inspiring future leaders.

Dr.Ndegwa’s appointment as Safaricom’s first Kenyan CEO was a pivotal moment, as previous CEOs were expatriates.

 Following the passing of his predecessor Bob Collymore, both the board and the government showed strong support for appointing a local leader.

 Michael Joseph, Safaricom’s former CEO and interim head during the transition, highlighted the desire for a Kenyan to lead the company, a sentiment echoed by former 

By aligning executive rewards with Safaricom’s evolving performance goals and reinvesting resources into expansion, Ndegwa demonstrates a long-term commitment to growth.

 His journey as CEO showcases how he has successfully balanced local roots with a global outlook, driving Safaricom’s mission to transform lives across Kenya and beyond.

Continue Reading

Business & Money

Dr Joshua Oigara Powers Stanbic, Africa’s Top Bank with SA Roots

Dr. Joshua Oigara blends a strong foundation in finance and economics with a doctorate in leadership effectiveness and sustainable growth, shaping his leadership approach with both practical expertise and academic insight.

Published

on

Under Dr. Joshua Oigara's leadership, Stanbic has achieved a remarkable 35% increase in digital transactions, thanks to innovative mobile banking solutions and SME-focused lending platforms. Currently, 93% of the bank's transactions are processed digitally. This digital-first strategy reflects Dr. Oigara's vision to align Stanbic's services with the growing tech-savviness of Kenya's population, ensuring the bank not only meets evolving customer needs but also stays competitive in a rapidly changing and crowded market.

: He leads Africa’s largest Bank by assets, driving innovation and growth across the continent with a focus on sustainable banking

When  Joshua Oigara took the reins as Chief Executive of Stanbic Bank Kenya and South Sudan on December 1, 2022, he brought with him a rare combination of practical expertise and scholarly insight. 

His predecessor, Charles Mudiwa, had cultivated nearly 20 years of growth at Standard Bank Group, leaving behind a solid foundation. 

Oigara, a seasoned leader known for his transformative tenure at Kenya Commercial Bank (KCB) from 2013 to 2021, took on the new role fortified by a recent academic milestone—an honourary degree of Doctor of Humane Letters, from the Kibabii University which he received on Friday, March 3, 2023. 

Dr. Oigara’s doctorate is not merely an academic achievement; it is a foundational element of his leadership philosophy. 

The university emphasised that his nomination was based on his exceptional accomplishments in finance, economics, and leadership, as well as his achievements and dedication to shared values and charitable endeavours.

In addition to his doctorate, Dr Oigara holds an MBA with distinction in International Business Management from Edith Cowan University in Australia, a Bachelor of Commerce degree from the University of Nairobi, and has completed the Advanced Management Programme at INSEAD in Fontainebleau, France.

With his doctoral focus on leadership effectiveness and sustainable growth in financial institutions, Oigara’s education and experience have significantly informed his strategic direction at Stanbic.

With a background in finance and economics, bolstered by a doctorate in leadership effectiveness and sustainable growth, Oigara’s leadership philosophy is rooted in both practical expertise and scholarly depth.

 The bank has made substantial strides under his guidance, growing its customer base, expanding its network of branches, and enhancing its digital services.

 Under his leadership, Stanbic has seen a 35% increase in digital transactions, driven by new mobile banking innovations and SME-focused lending platforms– 93  per cent of transactions at the local lender are processed digitally. 

 This digital-first strategy reflects Dr Oigara’s goal to align the bank’s services with Kenya’s increasingly tech-savvy population, an approach that not only meets client needs but also ensures Stanbic remains competitive in a crowded market.

 And it also reflects Oigara’s commitment to aligning the bank’s offerings with the needs of Kenya’s increasingly tech-savvy population.

Rapid Expansion and Financial Growth

In his first year, Dr Oigara focused on expanding Stanbic’s regional footprint while solidifying its position as a leader in digital banking and sustainable finance.

 Under his leadership, the bank has added five new branches, expanding its reach to more customers across Kenya.

 In terms of financial growth, Stanbic Kenya has seen an 8% increase in deposits, totalling Ksh 300 billion in 2023.

 The bank’s loan book also grew by 6%, driven by a focus on SMEs and digital lending platforms.

This growth is evident in Stanbic’s strong performance in customer acquisition, with the number of active customers increasing by 10% year-on-year. 

These efforts have also positioned Stanbic as the third-largest bank by assets in Kenya, with total assets valued at over Ksh 500 billion.

Focus on Sustainable Finance and Innovation

A cornerstone of Oigara’s strategy is the promotion of sustainable finance.

 In 2023, Stanbic launched a $150 million SME facility aimed at empowering small and medium-sized enterprises—described by Oigara as “the heartbeat of Kenya’s economy.” 

His leadership has seen the bank increase its support for businesses prioritising environmental, social, and governance (ESG) principles.

 Notably, Stanbic has financed over Ksh 1.2 billion in renewable energy projects, including solar energy ventures, since 2022.

Dr Oigara’s commitment to sustainable development also extends to Stanbic’s adherence to the United Nations Principles for Responsible Banking (PRB), positioning the bank as a leader in promoting environmentally and socially responsible investments.

 This aligns with Oigara’s philosophy that financial institutions must drive the transition to a greener, more sustainable economy.

“We are at the frontier of a new era in African trade,” Oigara shared during an African Continental Free Trade Area (AfCFTA) forum, highlighting Stanbic’s potential to leverage regional trade financing to foster cross-border business.

Challenges and Complex Markets

However, the terrain Dr Oigara navigates is arguably challenging. Stanbic competes in a high-stakes market, with other major players like Equity Bank and KCB, as well as digital lenders, all vying for market share.

 This competition requires both resilience and innovation, traits that Dr Oigara has emphasised throughout his career.

In South Sudan, the complexity multiplies, given the country’s political and economic volatility.

 “South Sudan remains a complex but promising market,” he said at a recent shareholder meeting. “Through a data-informed approach, we’re able to make strategic investments while managing the inherent risks.” His research on risk management in dynamic environments has informed Stanbic’s cautious yet optimistic stance in South Sudan.

Another challenge has been adapting to Kenya’s increasingly stringent regulatory landscape. 

Heightened Central Bank oversight on data privacy and credit management adds a layer of compliance, one that Oigara’s strategic background helps him manage.

 His academic foundation in sustainable business has enabled him to balance these regulatory demands with innovative solutions, implementing secure digital platforms that meet both client needs and regulatory standards.

Vision for the Future

Looking ahead, Dr. Oigara is focused on expanding Stanbic’s digital offerings and enhancing its regional presence through strategic partnerships.

 His leadership has set the stage for further growth, with Stanbic poised to continue increasing its footprint across Africa.

Opportunities on the Horizon

Despite these challenges, Dr. Oigara sees substantial opportunities for Stanbic’s growth.

 The African Continental Free Trade Area (AfCFTA) opens new doors for cross-border trade financing, allowing Stanbic to facilitate regional commerce.

 “We’re at the frontier of a new era in African trade,” he shared during an AfCFTA forum, underscoring his vision for positioning Stanbic as a key financial enabler across East Africa.

Building a Legacy of Informed Leadership

Dr. Joshua Oigara’s leadership of Stanbic Bank represents a powerful combination of industry experience and academic rigour. 

With assets totalling $20 billion and a presence in 20 countries, Stanbic is a testament to the vision of Standard Bank Group, which was founded over 160 years ago to serve the financial needs of Africa.

 Dr. Oigara’s contributions build on this legacy, as he guides the bank through a rapidly changing financial landscape.

Reflecting on his leadership journey, Dr Oigara said, “Education has empowered me to lead with a strategic, forward-thinking approach, ensuring we meet the evolving needs of our clients and foster resilience in the communities we serve.”

As Stanbic Bank continues to expand its footprint across Africa and innovate in the digital and sustainable finance spaces, Dr Oigara’s leadership ensures that the bank remains well-positioned for future success, solidifying its role as Africa’s largest and most dynamic banking institution.

Key Figures:

  • 35% increase in digital transactions (2023)
  • 93% of transactions processed digitally
  • 5 new branches added in 2023
  • 8% growth in deposits totaling Ksh 300 billion
  • 6% increase in loan book
  • Ksh 1.2 billion invested in renewable energy projects since 2022
  • $150 million SME facility launched in 2023

Continue Reading

Trending