After Microsoft, 4 Others, India’s Steel Company to Leave Nigeria Amid Economic Hardships
- Economic difficulties in the country are forcing Indian steel producer Aarti to leave Nigeria's manufacturing sector
- Significant parties have already made preliminary offers for the steel producer, ranging from $50 million to $100 million
- African Industries and Bharti are reportedly making bids to acquire the Indian-owned steel company, according to a source
Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.
Indian steel manufacturer Aarti is quitting Nigeria's manufacturing sector, joining a lengthy list of corporations that have left the nation due to economic hardships.
Source: Getty Images
BusinessDay has reported that large parties have already placed tentative bids ranging from $50 million to $100 million for the Ota, Ogun State-based steel manufacturer, which has previously been put up for sale.
Following Microsoft Nigeria, Total Energies Nigeria, PZ Cussons Nigeria PLC, Kimberly-Clark Nigeria, and Diageo PLC out of the most populous country in Africa, this will make it the sixth giant business to leave Nigeria in the first half of 2024.
Why Aarti is leaving
According to a source who spoke to the media on condition of anonymity, the steel maker's decision is based on several concerns, including a high debt rate, a difficult economy, fluctuating currency, rising inflation, and expensive energy costs.
A reliable source from one of the bidding companies, who is not authorised to speak on the issue, said,
“We are aware that Aarti Steel Nigeria has been put up for sale but we are yet to make our bid.”
The source claimed that Bharti and African Industries are submitting bids to purchase the Indian-owned steel company for between $50 million and $100 million. The process is anticipated to be completed in a few months.
According to a second source, the company is requesting investor profiles, indicating that the management of the business wishes to transfer ownership of Aarti to a reliable investor.
Expert view
Experts opined that the withdrawal of Aarti will further harm the nation's reputation as an investment destination and its goal of a $1 trillion GDP.
They noted that the country's $1 trillion GDP ambition and reputation as an investment destination will suffer even more from Aarti's departure.
The chief executive officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, stated that the implications of multinational corporations' persistent withdrawal from the economy are significant and warrant considerable concern.
Yusuf added,
“It has a negative implication for employment and the country’s perception as an investment destination.”
Aarti spent millions of dollar
Aarti invested $20–30 million to build a 120,000-seat cold-rolled mill in Ota, Ogun State, in 2017.
The factory aimed to supply Nigeria's downstream industry, which used steel to make filing cabinets, tables, chairs, roofing sheets, and household appliances. However, the investment doesn't seem to be as important now.
Aarti Steel Nigeria's director, G C Tripathi said that he is unaware that the company has been put up for sale and that important operational decisions are made in Indian, which is the home base of the company.
However, according to Tripathi, the company is attempting to secure additional funding and bank guarantees to boost output.
In March 2024, a senior management representative of the company disclosed that it was looking for investors.
According to the official, suppliers were concerned that the company was heavily indebted and that multiple delivery deadlines had been missed.
Meanwhile, growth in the manufacturing industry's basic metal, iron, and steel subsector decreased every quarter from 1.1% in the fourth quarter of 2023 to 0.57% in the first quarter of It increased from 0.46 to 0.57% annually, a gain of 0.11%.
Manufacturers have linked the nation's deteriorating business climate and increasing levels of insecurity, which are stifling profitability and eroding shareholder wealth, to the ongoing departure of multinational corporations.
Bill Gates’s firm to build $1bn data centre
Legit.ng reported that Microsoft, founded by billionaire businessman Bill Gates, and G42 are working together to build a $1 billion geothermal-powered data centre in Kenya.
G42 is a leading artificial intelligence company based in the United Arab Emirates.
This development comes after Microsoft shut down its Africa development centre in Nigeria, rendering about 200 people jobless.
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Source: Legit.ng
