The Economics of Turnaround Management: Lessons from Failed Brands in Nigeria
Nigeria’s business landscape has changed dramatically over the past five years. Hundreds of companies have shut down. Others have successfully navigated economic turbulence to return to profitability.
With inflation exceeding 27% and foreign exchange volatility continuing, the science of turnaround management has never been more critical.
Let me walk you through why brands fail, how successful companies recovered, and what lessons can guide your business.
Understanding turnaround management
According to Wikipedia, turnaround management is “a process dedicated to corporate renewal that uses analysis and planning to save troubled companies and return them to solvency, identifying the reasons for failing performance in the market and rectifying them.”
Source: Wikipedia. Turnaround management. https://en.wikipedia.org/wiki/Turnaround_management
This covers both reactive measures to address immediate crises and proactive strategies to prevent decline. Turnaround management is relevant not only for distressed companies but also for organisations facing directional challenges or rapid growth that requires structural adjustment.
The economic context: why Nigerian brands are failing
Between 2023 and 2024, Nigeria experienced unprecedented foreign exchange volatility. The naira depreciated significantly against major currencies, creating massive unrealised losses for companies with foreign currency exposure.
Multinational corporations such as MTN Nigeria, Nestle Nigeria, Nigerian Breweries, and Guinness Nigeria recorded combined foreign exchange losses exceeding $400 million in 2023 and 2024, pushing many into negative profitability.
The Central Bank of Nigeria, under Governor Yemi Cardoso’s leadership, hiked interest rates by 875 basis points from 18.75% to 27.25% in 2024. While aimed at controlling inflation, this policy significantly increased borrowing costs for businesses.
Notable closures included Standard Biscuits Nigeria Ltd, NASCO Fibre Product Ltd, and Union Trading Company Nigeria PLC in 2020. Tower Aluminium Nigeria PLC, Framan Industries Ltd, and Stone Industries Ltd closed in 2021. Multiple tech startups, including 54gene, Zazuu, Lazerpay, OkadaBooks, and Sendy, shut down in 2022 and 2023.
African tech startups secured only $780 million in the first half of 2024, the lowest since late 2020 and a 57% decrease from 2023. This funding crisis led to the shutdown of several Nigerian startups in Q1 2025, including Joovlin (fintech), Bento Africa (HR tech), and the temporary cessation of operations for others facing cash flow problems.
Source: Techpoint Africa. 4 African startups that shut down in Q1 2025. https://techpoint.africa/insight/african-startups-shutdown-2025
Case studies: from crisis to recovery
MTN Nigeria.
In Q1 2025, MTN Nigeria reversed its 2024 losses by posting a profit after tax of 87million.The turnaround was achieved by drastically reducing foreign exchange losses to just 3.5 million compared to previous quarters. The company realigned its business model to minimise FX exposure and implemented strict cost management protocols.
Key lessons. Currency risk management is critical for multinationals. Strategic hedging and operational adjustments can mitigate FX volatility. Quick adaptation to new economic realities separates survivors from casualties.
Nestle Nigeria Plc.
After recording significant losses in 2024, Nestle bounced back with a post-tax profit of $19.5 million in Q1 2025. By Q3 2025, the company reported N39.6 billion in pre-tax earnings, with revenue growing 32.9% year on year to N884.5 billion.
Source: Radarr Africa. Nestlé Nigeria Returns to Profit with N39.6bn Pre-Tax Earnings in Q3 2025. https://radarr.africa/nestle-nigeria-returns-to-profit-with-n39-6bn-pre-tax/
The turnaround was driven by strong brand loyalty for Maggi, Milo, Golden Morn, and Cerelac. Improved operational efficiency and cost control. Sharp reduction in finance costs from 146.5millionto106,000 in FX losses. Gross margin improvement from 30.6% to 33.6%.
Key lessons. Strong brands provide pricing power even in inflationary environments. Operational excellence and production efficiency are turnaround enablers. Strategic cost management can dramatically improve profitability.
Guinness Nigeria Plc and Nigerian Breweries Plc.
Both breweries recorded back-to-back quarterly profits in 2025 after years of losses. Guinness achieved a profit after tax of 7.6millioninQ2and4.5 million in Q3 2025. Nigerian Breweries recovered from its $97.3 million loss in 2024 to return to profitability.
Key lessons. Industry-wide challenges require sector-specific solutions. Patience and persistence in implementing turnaround strategies pay off. Currency stabilisation creates opportunities for recovery.
Cadbury Nigeria Plc.
Cadbury’s pre-tax profit soared to 5.5millioninQ12025,adramaticturnaroundfromthe7.9 million loss in the same period of 2024.
Key lessons. Consumer goods companies can recover through volume growth and pricing strategies. Supply chain optimisation reduces vulnerability to external shocks.
Why companies fail: root causes analysis
Poor market research and product market fit.
Many international brands that failed in Nigeria, such as Efritin (online classifieds), Easy Taxi, and numerous tech startups, underestimated the unique dynamics of the Nigerian market. Efritin’s closure was partly attributed to an inadequate market survey, especially considering that similar platforms like OLX were already struggling.
Source: Afridigest. 15 African tech startups that shut down in 2023. https://afridigest.com/15-african-tech-startups-shut
Cash flow mismanagement.
A typical Nigerian startup founder believes raising money is the key determinant of success. However, mismanagement of funds, setting up fancy offices, scaling teams too quickly, and spending on unnecessary PR have been identified as primary reasons for startup failures. Many startups fail not because they are insolvent or unprofitable, but because they simply run out of cash.
Inadequate marketing strategy.
Most Nigerian founders, especially in technology, are more fascinated by building great products than finding ways to sell them. The adage “if you build it, they will come” no longer applies in Nigeria’s competitive market.
Leadership and governance issues.
Internal crises, including management disputes, founder conflicts, and questionable decision-making, have contributed to numerous failures. Bento Africa’s temporary shutdown in February 2025 followed allegations of tax and pension remittance scams, CEO’s resignation, and unpaid salaries to the engineering team.
Inability to raise follow-on funding.
The global funding winter of 2023 and 2024 exposed startups that were unable to achieve sustainability before requiring additional capital. Companies like Zazuu, Lazerpay, Zumi, and Hytch all cited the inability to secure growth funding rounds as the primary reason for shutdown.
Fraud and internal mismanagement.
Efritin’s former MD was accused of stealing thousands of dollars while ignoring internal crises that accelerated the company’s demise. Such cases highlight how internal governance failures can compound external challenges.
The economics of turnaround management
The cash is king principle.
In turnaround situations, liquidity trumps profitability. Companies must prioritise actions that generate immediate cash flow, even if they sacrifice short-term profitability. Selling non-core assets. Collecting receivables aggressively. Negotiating extended payment terms with suppliers. Divesting unprofitable divisions.
The retrenchment renewal balance.
Turnaround economics involves two phases. Retrenchment in the short term focuses on reducing scope and size, stopping financial haemorrhaging, stabilising operations, generating resources through asset sales, and cost reduction. Renewal in the long term focuses on strategic repositioning, market development, product innovation, organisational restructuring, and building sustainable competitive advantage.
The 40% success rate reality.
Research indicates that only approximately 40% of companies achieve successful turnarounds. This statistic underscores several economic realities. Turnarounds require substantial resources. Time is a luxury distressed companies do not have. Stakeholder patience has limits. Not all businesses are viable even with perfect execution.
The speed imperative.
Most successful turnarounds are completed in two years or less. Creditors and investors have limited patience. Market opportunities are time sensitive. Competitors do not wait. Employee morale deteriorates with prolonged uncertainty.
Turnaround management as national priority
In February 2025, the Turnaround Management Association Nigeria, in partnership with the Konrad Adenauer Stiftung, held its Annual Conference with the theme “Reviving Moribund Assets: The Role of Turnaround Management in Nigeria’s Economic Recovery Strategy.”
Source: Radarr Africa. Experts Advocate Turnaround Management to Revive Nigeria’s Moribund Assets. https://radarr.africa/experts-advocate-turnaround-management-to-revive/
TMA Nigeria President Dr. Steve Ogidan emphasised that turnaround management should be viewed “not just as a crisis solution but as a strategic instrument for national prosperity.” He noted that when properly implemented, it can revive distressed but viable enterprises, preserve jobs, strengthen supply chains, and create new growth opportunities.
The conference concluded with consensus that turnaround management should become a national priority to rescue failing industries, create jobs, and reposition Nigeria’s economy for sustainable growth.
Practical framework for turnaround management
Stage one: Crisis assessment and stabilisation (2 to 4 weeks).
Objectives include stopping the bleeding, preventing insolvency, and securing immediate liquidity. Actions include conducting rapid financial assessment, identifying critical cash flow issues, negotiating with creditors for breathing room, communicating transparently with stakeholders, and implementing emergency cost controls.
Stage two: Root cause analysis (4 to 6 weeks).
Objectives include understanding why the business is failing, identifying salvageable versus unsalvageable elements, and determining viability for turnaround. Tools include SWOT analysis, market position assessment, operational audit, financial forensics, and management capability review.
Stage three: Strategic planning (6 to 8 weeks).
Objectives include developing a long term strategic plan, creating a detailed restructuring roadmap, and securing stakeholder buy in. Key decisions include which businesses to keep, divest, or close. Organisational structure changes. Leadership changes if needed. Capital structure restructuring. Market repositioning strategy.
Stage four: Implementation (6 to 18 months).
Objectives include executing the turnaround plan, building operational momentum, achieving quick wins for credibility, and managing stakeholder expectations. Critical success factors include strong leadership commitment, clear communication at all levels, regular milestone tracking, flexibility to adjust based on results, and employee engagement and motivation.
Stage five: Continuous evaluation and adjustment.
Objectives include monitoring critical performance indicators, identifying emerging issues early, refining strategy based on results, and institutionalising improvements. Metrics to track include cash flow and liquidity ratios, revenue trends, profitability margins, customer retention, employee engagement, and market share movement.
Critical success factors for Nigerian businesses
Foreign exchange risk management.
Companies with inadequate FX risk management recorded losses exceeding $100 million individually. Those that implemented robust hedging strategies returned to profitability within quarters.
Best practices include natural hedging through local sourcing where possible, forward contracts for predictable foreign payments, reducing foreign currency denominated debt, pricing strategies that account for FX volatility, and building local manufacturing capacity.
Brand strength and customer loyalty.
Nestle’s turnaround was significantly aided by the strength of brands like Maggi, Milo, and Golden Morn. Strong brands provide pricing power and customer retention during crises.
Best practices include investing consistently in brand building, maintaining quality standards even during cost cutting, engaging customers through crises, and leveraging brand equity for premium positioning.
Operational efficiency.
Nestle improved gross margins from 30.6% to 33.6% through operational excellence, directly contributing to profitability recovery.
Best practices include continuous process improvement, technology adoption for efficiency, supply chain optimisation, energy cost management, and waste reduction programmes.
Strategic cost management.
Companies that indiscriminately cut costs often damage long term viability. Strategic cost management preserves capabilities while improving efficiency.
Best practices include differentiating between strategic and non strategic costs, protecting revenue generating capabilities, using zero based budgeting during crises, benchmarking against industry best practices, and investing in automation where ROI is clear.
Leadership quality and decisiveness.
Turnarounds require difficult decisions. Layoffs. Asset sales. Strategic pivots. Weak leadership prolongs crises.
Best practices include changing leadership when necessary, communicating transparently about challenges, making data driven decisions quickly, balancing short term survival with long term viability, and building crisis management capabilities.
Stakeholder management.
Turnarounds require cooperation from creditors, suppliers, employees, and customers. Poor stakeholder management can sabotage even well designed turnaround plans.
Best practices include transparent communication about the situation and plans, fair treatment of all stakeholder groups, negotiating win win restructuring agreements, maintaining supplier relationships through crises, and preserving employee morale and engagement.
Where to start tomorrow
Do not wait for a crisis to build turnaround capabilities.
Monitor your cash flow weekly. Know your runway. Identify warning signs early.
Build strong brands. Pricing power during inflation comes from brand loyalty.
Manage FX risk. Natural hedging. Forward contracts. Reduce foreign currency debt.
Keep your operations efficient. Continuous improvement. Technology adoption. Cost discipline.
Maintain stakeholder relationships. Creditors, suppliers, employees, customers. All matter.
Have a plan. Even if you never need it, know what you would do.
Final word
The economics of turnaround management in Nigeria reveals a complex interplay between macroeconomic pressures, company specific challenges, leadership quality, and strategic execution.
The period from 2020 to 2025 has been particularly instructive. Hundreds of companies failed. Others demonstrated remarkable resilience.
Turnaround management is not merely about surviving crises. It is about building resilient, adaptable organisations capable of thriving in volatile environments.
Successful turnarounds happen quickly, within two years. They focus on cash flow and core strengths. They avoid trying to fix everything simultaneously.
The 2025 recoveries of MTN Nigeria, Nestle, Guinness, Nigerian Breweries, and Cadbury demonstrate that with the right strategies, leadership, and economic stabilisation, turnarounds are achievable.
The lessons are clear. Build strong brands. Manage cash religiously. Understand your market deeply. Maintain operational excellence. Lead decisively. Always have a turnaround plan before you need one.
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REFERENCES
Wikipedia. Turnaround management. https://en.wikipedia.org/wiki/Turnaround_management
Radarr Africa. Experts Advocate Turnaround Management to Revive Nigeria’s Moribund Assets. https://radarr.africa/experts-advocate-turnaround-management-to-revive/
Finance in Africa. Nigeria’s loss-making companies are returning to profit, fuelling a bullish stock market. https://financeinafrica.com/insights/nigerias-loss-making-companies-are-returning-to-profit-fuelling-a-bullish-stock-market/
Radarr Africa. Nestlé Nigeria Returns to Profit with N39.6bn Pre-Tax Earnings in Q3 2025 After 2024 Loss. https://radarr.africa/nestle-nigeria-returns-to-profit-with-n39-6bn-pre-tax/
Techpoint Africa. 4 African startups that shutdown in Q1 2025. https://techpoint.africa/insight/african-startups-shutdown-2025
Punch Newspapers. FULL LIST: Firms that left Nigeria from 2020 to 2024 over economic challenges. https://punchng.com/full-list-firms-that-left-nigeria-from-2020-to-2024-over-economic-challenges/
Cambridge Business English Dictionary. Turnaround Management. https://dictionary.cambridge.org/dictionary/english/turnaround-management
Implement Consulting Group. Turnaround management – an introduction. https://implementconsultinggroup.com/article/turnaround-management-an-introduction
Toolshero. Turnaround Management explained. https://www.toolshero.com/management/turnaround-management/
Afridigest. 15 African tech startups that shut down in 2023: Why they did it. https://afridigest.com/15-african-tech-startups-shut
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