On February 24, Ukraine woke up to Russia’s invasion of its territory after several months of growing tension and predictions following the order of Russia’s president, Vladimir Putin.
According to the British Broadcasting Corporation, Putin aims to overrun Ukraine, oust its government and end its desire to join the western defensive alliance, North Atlantic Treaty Organisation.
Despite various calls and threats of sanctions from the western world, the invasion, which is about to enter day 40, continues, with over 1,232 civilian deaths and 1,935 persons injured, as reported by the office of the United Nations High Commissioner for Human Rights.
Amid the continuous bombings, several companies had been reported to have halted sales or closed shops in Russia.
According to The New York Times, Heineken announced on Monday that it was finally getting out of Russia after a previous statement that it would no longer produce, sell, advertise and export its product to Russia.
Among the multinational companies reported to have exited or suspended their operations were Nestlé, British American Tobacco, Unilever, Adidas, Shell, BP, Exxon Mobil, Deutsche Bank, Goldman Sachs, Deloitte, KPMG, PWC, Burger King, PepsiCo, Starbuck, McDonald’s, Accenture and Airbnb.
Media companies also listed to have suspended their operations in Russia were Bloomberg, Netflix and The Walt Disney Company while tech giants such as LG, IBM, Google, Sony, YouTube, and Amazon, among others, suspended or paused their operations.
At the onset of the war, the Nigerian government, through its foreign mission, approved the release of $8.5m for the evacuation of about 5,000 Nigerians fleeing the Russia-Ukraine conflict.
Also, an April 1 report by Yale School of Management stated that “almost 500 companies have announced their withdrawal from Russia but some companies have continued to operate in Russia undeterred.”
The school listed 38 companies who are still running business in the country to include Lenovo, Huawei, Xiaomi, Tencent Turkish Airlines, Cloudfare and Alibaba, with 69 companies postponing future investment, marketing and development.
While companies continue to exit or suspend their activities in Russia in protest against its invasion of Ukraine, the insecurity and economic challenges in Nigeria have forced firms to exit the country. According to a World Bank Enterprise survey, between 2009 and 2014, 322 private firms shut down their operations in the country.
Rising insecurity in Nigeria has further affected the ease of doing business as a 2019 World Bank annual ratings on the ease of doing business ranked Nigeria 131 among 190 economies.
A 2021 journal article by Kosy Aghaulor, titled ‘Growth impact of insecurity on the Nigerian Economy,’ indicated that the security challenge in Nigeria constituted a threat to lives and property and had hindered business activities and discouraged local and foreign investors, consequently, stifling and retarding socio-economic development.
Also, a recent World Bank report, titled, ‘A Better Future for All Nigerians: 2022 Nigeria Poverty Assessment,’ stated that many Nigerians had fallen below the poverty line, adding that the poverty reduction appeared to have been stalled since 2015 while the number of poor people rose.
To that end, economists have decried the effect of insecurity on the economy, stating that the situation painted a bleak future for the economy.
A professor of Economics at Godfrey Okoye University, Enugu State, Felix Onah, said security in Nigeria had affected the cost of production, the level of foreign investment and prevented companies from planning for the future.
Onah added that the consequent effect would be the continuous emigration of companies and the closing down of local manufacturing.
He also noted that the lack of constant electricity and other social amenities increased the cost of production and affected the profit margin of companies.
“The insecurity in the country is affecting the level of investment in the country and also the Gross Domestic Product. When companies leave the country, their production in the country is taken away and this would negatively affect the GDP of the country. Domestic investment is also adversely affected by the insecurity of the country, for example, farmers cannot go to the farm and even manufacturers cannot plan for the future. This would then lead to the reduction in agricultural and manufacturing output that would cause an adverse economic effect on the GDP,” Onah added.
He, therefore, called for the tackling of security challenges in the country through the implementation of state policing.
Also, an economist and Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said the investment prospects in the country had nosedived due to insecurity.
He added that the situation had led to the exit of both large, small and medium scale enterprises in places worst hit.
The ex-Lagos Chamber of Commerce and Industry Director-General stated that insecurity in the oil-producing states had led to the exit of some oil companies, adding that oil theft and illegal refineries had hindered Nigeria from contributing to its quota at the Organisation of the Petroleum Exporting Countries.
Yusuf said, “The South-South is another area where insecurity is a major problem. Many of the oil majors have left the country, because of pipeline vandalism, illegal refineries and oil theft. Some have divested, some have left the onshore and gone to deep onshore because they can no longer operate on land. The risk of investing in the oil-producing areas is also high and because of that many investors have left. Now, we have an OPEC quota that we cannot meet because of the insecurity problem and oil theft. Oil price is above $100 per barrel and we cannot benefit maximally from it because of our production level.”
He added that insecurity also had implications for the perception of the country.
Yusuf stated, “With the terrible news about kidnappings, Boko Haram and all, how many investors want to come here? The only class of investors that would come are, one, those who would only come for a short term, maybe they are trading and would want to dump their products and go back. For those who want to invest long term, not many of them would want to come in because the risk is high. Second, we would only be able to attract investors who have a high appetite for risk and not all investors have the same appetite for risk. These have made us lose investors that don’t have a high appetite for risk and attract those with a high appetite for risk.”
Yusuf further said that the consequences of low investment had affected the ability of a country to create jobs, generate tax revenue and others in the economy as insecurity was escalating daily. ,,
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