For Multinationals, Africa’s Allure Is Fading
After decades of optimism about the region, global giants such as Bayer, Nestlé and Unilever are cutting back.
Nestlé SA in August shuttered production of Nesquik chocolate milk powder in South Africa, citing falling demand. A year ago, Unilever Plc pulled the plug on the manufacturing of home-care and skin-cleansing products in Nigeria to “sustain profitability.” And pharma giants Bayer AG and GSK Plc have outsourced distribution of their products to independent companies in Kenya and Nigeria.
Drawn by rapid growth, youthful populations and increasing wealth, legions of top multinationals rushed into Africa in recent decades. But lately, the difficulties of doing business there—cratering currencies, overweening bureaucracies, unreliable power and congested ports—have dimmed the allure. “It doesn’t justify the effort,” says Kuseni Dlamini, a former chairman of Walmart Inc.’s African unit who now heads 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.”