Impact of Macroeconomic Instability on Foreign Direct Investment (FDI) in Nigeria: An Analysis of GlaxoSmithKline, Kimberly-Clark, and Procter & Gamble (P&G) Exits

David Babatunde Ayoola

doi:doi:10.11648/j.jbed.20240904.13

Research Article |

| Peer-Reviewed

Impact of Macroeconomic Instability on Foreign Direct Investment (FDI) in Nigeria: An Analysis of GlaxoSmithKline, Kimberly-Clark, and Procter & Gamble (P&G) Exits

David Babatunde Ayoola^*

Published in Journal of Business and Economic Development (Volume 9, Issue 4)

Received: 10 October 2024 Accepted: 1 November 2024 Published: 29 November 2024

Views: Downloads:

Download PDF

Share This Article

Twitter
Linked In
Facebook

Abstract

This study explores the impact of macroeconomic instability on Foreign Direct Investment (FDI) in Nigeria, with a particular focus on the recent exits of popular multinational corporations such as GlaxoSmithKline, Kimberly-Clark, and Procter & Gamble. FDI contributes significantly to the economic growth of developing countries like Nigeria driving industrialization. The research investigates the influence of key macroeconomic variables, including inflation and exchange rate volatility, on FDI inflows between 2013 and 2022. Using a mixed-methods approach which combines qualitative and quantitative techniques, the study employs Ordinary Least Squares (OLS) regression, correlation analysis, and case study analysis to understand the relationship between macroeconomic instability and FDI trends. These selected multinational corporations provide more insights into the factors influencing their decision to exit the Nigerian market. The findings reveal that exchange rate volatility has a more significant negative impact on FDI inflows compared to inflation, which suggests that frequent and unpredictable fluctuations in the value of the Nigerian naira play a vital role in investors’ confidence and inform their decision-making. The study concludes with policy recommendations to stabilize Nigeria’s macroeconomic environment. These recommendations are targeted at creating an investor-friendly climate to retain existing investors and to attract foreign direct investments into the country ultimately contributing to the country’s economic growth and development.

Published in	Journal of Business and Economic Development (Volume 9, Issue 4)
DOI	10.11648/j.jbed.20240904.13
Page(s)	134-144
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Foreign Direct Investment (FDI), Macroeconomic Instability, Exchange Rate Volatility, Inflation, GlaxoSmithKline, Kimberly-Clark, Procter & Gamble, Multinational Corporations

References

[1]	African Marketing Confederation News. (2024, May). Kimberly-Clark confirms its exit from the troubled Nigerian market. Retrieved from African Marketing Confederation News: https://africanmarketingconfederation.org/kimberly-clark-confirms-its-exit-from-the-troubled-nigerian-market/
[2]	Alkassim, B. (2024, June 6). Reps move to avert exit of Kimberly-Clark from Nigeria. Retrieved from Daily Trust: https://dailytrust.com/reps-move-to-avert-exit-of-kimberly-clark-from-nigeria/#:~:text=%E2%80%9CThe%20exit%20of%20Kimberly%2DClark,at%20affordable%20prices%20in%20Nigeria.%E2%80%9D
[3]	Azeez, W. (2023, August 8). EXPLAINER: Here’s why GSK is leaving Nigeria after 51 years. Retrieved from The Cable: https://www.thecable.ng/explainer-heres-why-gsk-is-leaving-nigeria-after-51-years/
[4]	Bakar, A. H., Sinnappan, P., Salim, F. A., & Teo, P. (2022). Factors Influencing Foreign Direct Investment (FDI) Location Selection: A Review of the Literature. International Journal of Academic Research in Business and Social Sciences, 1271-1291. https://doi.org/10.6007/IJARBSS/v12-i7/14103
[5]	Batalla, D. d. (2014). ICT impact on internationalization - A critical review of the eclectic paradigm. Journal of Socioeconomic Engineering, 2, 16-24.
[6]	Bull, A. (2024, July 30). Understanding Nigeria’s Currency Slump, and What. Retrieved from Bloomberg: https://www.bloomberg.com/news/articles/2024-07-30/why-nigeria-s-naira-currency-ngn-usd-slumped-and-why-it-matters
[7]	Chen, J. (2020, November 24). Eclectic Paradigm: Definition, Example, Advantages. Retrieved from Investopedia: https://www.investopedia.com/terms/e/eclecticparadigm.asp
[8]	Corporate Finance Institute. (2024). Eclectic Paradigm. Retrieved from Corporate Finance Institute: https://corporatefinanceinstitute.com/resources/management/eclectic-paradigm/
[9]	Ebrary. (2014). Dunning's OLI Paradigm. Retrieved from Ebrary: https://ebrary.net/21274/management/dunnings_paradigm
[10]	Ejedegba, R. U. (2022). Macroeconomic Instability, Policy Uncertainty and Investment Performance: The case of Nigeria. International Review of Economics & Finance, 83, 1-17.
[11]	Emenuga, P. E. (2019). Impact Of Macroeconomic Variables on Foreign Direct Investment Flow in Nigeria: Ardl Model. African Journal of Accounting and Financial Research. 2(1), 1-10. https://doi.org/10.19044/esj.2013.v9n28p%p
[12]	Enu, P., Havi, E. D., & Attah-Obeng, P. (2013). Impact of Macroeconomic Factors on Foreign Direct Investment in Ghana: A Cointegration Analysis. European Scientific Journal, 9(28), 331-348.
[13]	Investopedia. (2023, August 29). Modern Portfolio Theory: What MPT Is and How Investors Use It. Retrieved from Investopedia: https://www.investopedia.com/terms/m/modernportfoliotheory.asp
[14]	Jalil, A. Z., Harun, M., & Mat, S. H. (2012). Macroeconomic Instability and Fiscal Decentralization: An Empirical Analysis. Prague Economic Papers. 2012(2), 150-165. https://doi.org/10.18267/j.pep.416
[15]	Kareem, K. (2023, August 14). Did GlaxoSmithKline leave Nigeria due to low profits? Retrieved from Dataphyte: https://www.dataphyte.com/latest-reports/did-glaxosmithkline-leave-nigeria-due-to-low-profits/
[16]	Morris, H. (2024, June 26). Kimberly-Clark to exit Nigeria. Retrieved from Tissue World: https://www.tissueworldmagazine.com/world-news/kimberly-clark-to-exit-nigeria/#:~:text=Kimberly%2DClark%20(K%2DC)%20has,economic%20developments%20in%20the%20country.%E2%80%9D
[17]	Nwachukwu, R. (2019). Factors Influencing Foreign Direct Investment in Nigeria (Case Study Nigerian Oil and Gas Sector). International Journal of Research and Innovation in Social Science, 3(8), 403-411.
[18]	OECD. (2024). Foreign direct investment (FDI). Retrieved from OECD Library: https://oecd-ilibrary.org/finance-and-investment/foreign-direct-investment-fdi/indicator-group/english_9a523b18-en#:~:text=Foreign%20direct%20investment%20(FDI)%20is,enterprise%20resident%20in%20another%20economy
[19]	Ohuocha, C. (2023, August 3). GSK Nigeria calls an end to its business, to return cash. Retrieved from Reuters: https://www.reuters.com/business/healthcare-pharmaceuticals/gsk-nigeria-calls-an-end-its-business-return-cash-2023-08-03/
[20]	Ologunagbe, O. (2023, December 7). P&G Nigeria exit ends 5000 jobs. Retrieved from BusinessDay: https://businessday.ng/news/article/p-g-nigeria-exit-ends-5000-jobs/
[21]	Oloruntade, G. (2024, June 3). Kimberly-Clark lays off 90% of employees as it begins Nigerian exit. Retrieved from TechCabal: https://techcabal.com/2024/06/03/kimberly-clark-nigeria/
[22]	Omisore, I., Yusuf, M., & Christopher, N. (2012). The modern portfolio theory as an investment decision tool. Journal of Accounting and Taxation, 19-28. https://doi.org/10.5897/JAT11.036
[23]	Onwuamaeze, D. (2023, December 7). Following GSK’s Exit, P&G Moves to Leave Nigeria. Retrieved from THISDAY: https://www.thisdaylive.com/index.php/2023/12/07/following-gsks-exit-pg-moves-to-leave-nigeria/#:~:text=Schulten%2C%20attributed%20the%20P%26G's%20decision,in%20because%20of%20macroeconomic%20environment
[24]	Opeyemi, A. F. (2020). Impact of Foreign Direct Investment and Inflation on Economic Growth of Five Randomly Selected Countries in Africa. Journal of Economics and International Finance, 65-73. https://doi.org/10.5897/JEIF2020.1031
[25]	Paul, E. (2023, June 14). Nigeria floats the naira as official exchange rate falls to ₦‎664/$1. Here's what you should know. Retrieved from Techpoint: https://techpoint.africa/2023/06/14/nigeria-naira-float-explained/
[26]	Sammut-Bonnici, T. (2015). Foreign Direct Investment. Wiley Encyclopedia of Management. https://doi.org/1002/9781118785317.weom120217
[27]	Susilo, D. (2018). 2018 The Impact of Foreign Direct Investment on Economic Growth (a Causal Study in the United States). Jurnal Pendidikan Bisnis dan Ekonomi. 4(1). https://doi.org/10.20961/bise.v4i1.21422
[28]	Trading Economics. (2024, August 15). Nigeria Inflation Rate. Retrieved from Trading Economics: https://tradingeconomics.com/nigeria/inflation-cpi
[29]	Trading Economics. (2024, September 5). Trading Economics. Retrieved from Nigerian Naira: https://tradingeconomics.com/nigeria/currency
[30]	Udi, A. (2023, December 6). P&G to dissolve ground operations in Nigeria, revert to an import-only business model. Retrieved from Nairametrics: https://nairametrics.com/2023/12/06/pg-to-dissolve-ground-operations-in-nigeria-revert-to-an-import-only-business-model/
[31]	Wan, X. (2010). A Literature Review on the Relationship between Foreign Direct Investment and Economic Growth. International Business Research. https://doi.org/10.5539/ibr.v3n1p52

Cite This Article

Plain Text BibTeX RIS

APA Style

Ayoola, D. B. (2024). Impact of Macroeconomic Instability on Foreign Direct Investment (FDI) in Nigeria: An Analysis of GlaxoSmithKline, Kimberly-Clark, and Procter & Gamble (P&G) Exits. Journal of Business and Economic Development, 9(4), 134-144. https://doi.org/10.11648/j.jbed.20240904.13

Copy | Download

ACS Style

Ayoola, D. B. Impact of Macroeconomic Instability on Foreign Direct Investment (FDI) in Nigeria: An Analysis of GlaxoSmithKline, Kimberly-Clark, and Procter & Gamble (P&G) Exits. J. Bus. Econ. Dev. 2024, 9(4), 134-144. doi: 10.11648/j.jbed.20240904.13

Copy | Download

AMA Style

Ayoola DB. Impact of Macroeconomic Instability on Foreign Direct Investment (FDI) in Nigeria: An Analysis of GlaxoSmithKline, Kimberly-Clark, and Procter & Gamble (P&G) Exits. J Bus Econ Dev. 2024;9(4):134-144. doi: 10.11648/j.jbed.20240904.13

Copy | Download

@article{10.11648/j.jbed.20240904.13,
  author = {David Babatunde Ayoola},
  title = {Impact of Macroeconomic Instability on Foreign Direct Investment (FDI) in Nigeria: An Analysis of GlaxoSmithKline, Kimberly-Clark, and Procter & Gamble (P&G) Exits
},
  journal = {Journal of Business and Economic Development},
  volume = {9},
  number = {4},
  pages = {134-144},
  doi = {10.11648/j.jbed.20240904.13},
  url = {https://doi.org/10.11648/j.jbed.20240904.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jbed.20240904.13},
  abstract = {This study explores the impact of macroeconomic instability on Foreign Direct Investment (FDI) in Nigeria, with a particular focus on the recent exits of popular multinational corporations such as GlaxoSmithKline, Kimberly-Clark, and Procter & Gamble. FDI contributes significantly to the economic growth of developing countries like Nigeria driving industrialization. The research investigates the influence of key macroeconomic variables, including inflation and exchange rate volatility, on FDI inflows between 2013 and 2022. Using a mixed-methods approach which combines qualitative and quantitative techniques, the study employs Ordinary Least Squares (OLS) regression, correlation analysis, and case study analysis to understand the relationship between macroeconomic instability and FDI trends. These selected multinational corporations provide more insights into the factors influencing their decision to exit the Nigerian market. The findings reveal that exchange rate volatility has a more significant negative impact on FDI inflows compared to inflation, which suggests that frequent and unpredictable fluctuations in the value of the Nigerian naira play a vital role in investors’ confidence and inform their decision-making. The study concludes with policy recommendations to stabilize Nigeria’s macroeconomic environment. These recommendations are targeted at creating an investor-friendly climate to retain existing investors and to attract foreign direct investments into the country ultimately contributing to the country’s economic growth and development.
},
 year = {2024}
}

Copy | Download

TY  - JOUR
T1  - Impact of Macroeconomic Instability on Foreign Direct Investment (FDI) in Nigeria: An Analysis of GlaxoSmithKline, Kimberly-Clark, and Procter & Gamble (P&G) Exits

AU  - David Babatunde Ayoola
Y1  - 2024/11/29
PY  - 2024
N1  - https://doi.org/10.11648/j.jbed.20240904.13
DO  - 10.11648/j.jbed.20240904.13
T2  - Journal of Business and Economic Development
JF  - Journal of Business and Economic Development
JO  - Journal of Business and Economic Development
SP  - 134
EP  - 144
PB  - Science Publishing Group
SN  - 2637-3874
UR  - https://doi.org/10.11648/j.jbed.20240904.13
AB  - This study explores the impact of macroeconomic instability on Foreign Direct Investment (FDI) in Nigeria, with a particular focus on the recent exits of popular multinational corporations such as GlaxoSmithKline, Kimberly-Clark, and Procter & Gamble. FDI contributes significantly to the economic growth of developing countries like Nigeria driving industrialization. The research investigates the influence of key macroeconomic variables, including inflation and exchange rate volatility, on FDI inflows between 2013 and 2022. Using a mixed-methods approach which combines qualitative and quantitative techniques, the study employs Ordinary Least Squares (OLS) regression, correlation analysis, and case study analysis to understand the relationship between macroeconomic instability and FDI trends. These selected multinational corporations provide more insights into the factors influencing their decision to exit the Nigerian market. The findings reveal that exchange rate volatility has a more significant negative impact on FDI inflows compared to inflation, which suggests that frequent and unpredictable fluctuations in the value of the Nigerian naira play a vital role in investors’ confidence and inform their decision-making. The study concludes with policy recommendations to stabilize Nigeria’s macroeconomic environment. These recommendations are targeted at creating an investor-friendly climate to retain existing investors and to attract foreign direct investments into the country ultimately contributing to the country’s economic growth and development.

VL  - 9
IS  - 4
ER  -

Copy | Download

Author Information

David Babatunde Ayoola

Department of Sustainable Development, University of Salford, Salford, UK

Contact Email

http://orcid.org/0009-0000-5646-0397

Download PDF

Sections

Plain Text BibTeX RIS

APA Style

Ayoola, D. B. (2024). Impact of Macroeconomic Instability on Foreign Direct Investment (FDI) in Nigeria: An Analysis of GlaxoSmithKline, Kimberly-Clark, and Procter & Gamble (P&G) Exits. Journal of Business and Economic Development, 9(4), 134-144. https://doi.org/10.11648/j.jbed.20240904.13

Copy | Download

ACS Style

Ayoola, D. B. Impact of Macroeconomic Instability on Foreign Direct Investment (FDI) in Nigeria: An Analysis of GlaxoSmithKline, Kimberly-Clark, and Procter & Gamble (P&G) Exits. J. Bus. Econ. Dev. 2024, 9(4), 134-144. doi: 10.11648/j.jbed.20240904.13

Copy | Download

AMA Style

Ayoola DB. Impact of Macroeconomic Instability on Foreign Direct Investment (FDI) in Nigeria: An Analysis of GlaxoSmithKline, Kimberly-Clark, and Procter & Gamble (P&G) Exits. J Bus Econ Dev. 2024;9(4):134-144. doi: 10.11648/j.jbed.20240904.13

Copy | Download

@article{10.11648/j.jbed.20240904.13,
  author = {David Babatunde Ayoola},
  title = {Impact of Macroeconomic Instability on Foreign Direct Investment (FDI) in Nigeria: An Analysis of GlaxoSmithKline, Kimberly-Clark, and Procter & Gamble (P&G) Exits
},
  journal = {Journal of Business and Economic Development},
  volume = {9},
  number = {4},
  pages = {134-144},
  doi = {10.11648/j.jbed.20240904.13},
  url = {https://doi.org/10.11648/j.jbed.20240904.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jbed.20240904.13},
  abstract = {This study explores the impact of macroeconomic instability on Foreign Direct Investment (FDI) in Nigeria, with a particular focus on the recent exits of popular multinational corporations such as GlaxoSmithKline, Kimberly-Clark, and Procter & Gamble. FDI contributes significantly to the economic growth of developing countries like Nigeria driving industrialization. The research investigates the influence of key macroeconomic variables, including inflation and exchange rate volatility, on FDI inflows between 2013 and 2022. Using a mixed-methods approach which combines qualitative and quantitative techniques, the study employs Ordinary Least Squares (OLS) regression, correlation analysis, and case study analysis to understand the relationship between macroeconomic instability and FDI trends. These selected multinational corporations provide more insights into the factors influencing their decision to exit the Nigerian market. The findings reveal that exchange rate volatility has a more significant negative impact on FDI inflows compared to inflation, which suggests that frequent and unpredictable fluctuations in the value of the Nigerian naira play a vital role in investors’ confidence and inform their decision-making. The study concludes with policy recommendations to stabilize Nigeria’s macroeconomic environment. These recommendations are targeted at creating an investor-friendly climate to retain existing investors and to attract foreign direct investments into the country ultimately contributing to the country’s economic growth and development.
},
 year = {2024}
}

Copy | Download

TY  - JOUR
T1  - Impact of Macroeconomic Instability on Foreign Direct Investment (FDI) in Nigeria: An Analysis of GlaxoSmithKline, Kimberly-Clark, and Procter & Gamble (P&G) Exits

AU  - David Babatunde Ayoola
Y1  - 2024/11/29
PY  - 2024
N1  - https://doi.org/10.11648/j.jbed.20240904.13
DO  - 10.11648/j.jbed.20240904.13
T2  - Journal of Business and Economic Development
JF  - Journal of Business and Economic Development
JO  - Journal of Business and Economic Development
SP  - 134
EP  - 144
PB  - Science Publishing Group
SN  - 2637-3874
UR  - https://doi.org/10.11648/j.jbed.20240904.13
AB  - This study explores the impact of macroeconomic instability on Foreign Direct Investment (FDI) in Nigeria, with a particular focus on the recent exits of popular multinational corporations such as GlaxoSmithKline, Kimberly-Clark, and Procter & Gamble. FDI contributes significantly to the economic growth of developing countries like Nigeria driving industrialization. The research investigates the influence of key macroeconomic variables, including inflation and exchange rate volatility, on FDI inflows between 2013 and 2022. Using a mixed-methods approach which combines qualitative and quantitative techniques, the study employs Ordinary Least Squares (OLS) regression, correlation analysis, and case study analysis to understand the relationship between macroeconomic instability and FDI trends. These selected multinational corporations provide more insights into the factors influencing their decision to exit the Nigerian market. The findings reveal that exchange rate volatility has a more significant negative impact on FDI inflows compared to inflation, which suggests that frequent and unpredictable fluctuations in the value of the Nigerian naira play a vital role in investors’ confidence and inform their decision-making. The study concludes with policy recommendations to stabilize Nigeria’s macroeconomic environment. These recommendations are targeted at creating an investor-friendly climate to retain existing investors and to attract foreign direct investments into the country ultimately contributing to the country’s economic growth and development.

VL  - 9
IS  - 4
ER  -

Copy | Download