The wave of multinational companies exiting Nigeria continues to swell, presenting a grim reflection of the nation's current economic climate. The latest casualty, Aarti Steel, a prominent Indian steel maker, is set to leave the Nigerian manufacturing sector, further deepening concerns about the country’s investment environment. This trend starkly contrasts with the Nigerian government’s professed commitment to attract foreign investment through orthodox economic policies championed by international financial institutions like the IMF and World Bank.

President Bola Tinubu’s administration has embarked on a series of reforms intended to liberalize the economy and create a conducive environment for business. These measures include the withdrawal of subsidies, devaluation of the naira, and increased taxation. Ironically, instead of bolstering investor confidence, these policies seem to be exacerbating the economic woes, leading to a spate of high-profile corporate departures.

The challenges plaguing Nigeria’s economy are multifaceted. Aarti Steel’s decision to exit is attributed to a combination of high indebtedness, a volatile economic environment, a depreciating currency, surging inflation, and exorbitant energy costs. These factors collectively create a hostile business environment, making it difficult for companies to operate profitably.

The departure of Aarti Steel is not an isolated incident. It joins a growing list of multinational corporations that have exited Nigeria in recent times, including Microsoft Nigeria, Total Energies Nigeria, PZ Cussons Nigeria PLC, Kimberly-Clark Nigeria, and Diageo PLC. The exodus of these firms not only disrupts the local job market but also tarnishes Nigeria’s image as a viable investment destination, undermining efforts to achieve a $1 trillion GDP target.

This troubling trend calls for a re-evaluation of the current economic policies. While the withdrawal of subsidies and devaluation might align with IMF and World Bank prescriptions, the adverse impacts on the local economy suggest that a more nuanced approach is necessary. Here are several strategies that could help reverse this tide and create a more stable and attractive environment for both local and foreign investors:

1. Stable Macroeconomic Policies: The government must focus on stabilizing the macroeconomic environment. This includes controlling inflation, stabilizing the currency, and ensuring a consistent regulatory framework that supports long-term business planning.

2. Improving Infrastructure: High operational costs, particularly in energy, significantly hinder manufacturing. Investing in reliable and affordable infrastructure, especially in energy, transport, and communication, can reduce these costs and make the business environment more attractive.

3. Incentives for Local Manufacturing: Providing tax incentives, subsidies for key inputs, and facilitating access to finance for local manufacturers can help boost domestic production and reduce reliance on imports.

4. Enhancing Security: The pervasive security challenges in Nigeria deter investment. Strengthening law enforcement and ensuring a safer environment for businesses and their employees is crucial.

5. Promoting Ease of Doing Business: Streamlining bureaucratic processes, reducing red tape, and enhancing transparency can improve Nigeria’s ranking in global ease of doing business indices, thereby attracting more investors.

6. Public-Private Partnerships: Encouraging collaboration between the government and the private sector can lead to more effective policy-making and implementation. This includes involving businesses in the dialogue on economic reforms and infrastructure development.

7. Skill Development: Investing in education and vocational training can create a more skilled workforce, which is attractive to both local and foreign businesses looking to operate in Nigeria.

While the exit of multinational companies like Aarti Steel paints a bleak picture, it also serves as a wake-up call for policymakers. By addressing the underlying issues that drive businesses away and fostering a more supportive environment, Nigeria can turn the tide, retain its existing investors, and attract new ones, ultimately paving the way for sustained economic growth and development.