Jumoke Olasunkanmi
Another consumer goods company, Procter & Gamble (P&G), has revealed plans to discontinue its on-ground operations in Nigeria, saying it is opting for an import-based business model in the country.
The decision was disclosed by P&G’s Chief Financial Officer, Andre Schulten, during his presentation at the Morgan Stanley Global Consumer & Retail Conference.
Schulten explained that the decision is due to the current state of macroeconomics in the country which has made it difficult to do business.
“The other reality that arises in some of these markets is that it gets increasingly difficult to operate and create U.S dollar value. So when you think about places like Nigeria and Argentina, it is difficult for us to operate because of the macroeconomic environment,” he stated.
The CFO detailed the restructuring programme, stating, “We are announcing a restructuring programme with the intent to adjust the operating model and portfolio to maintain the discipline that has brought us to this point.”
The focus of the programme will be primarily on Nigeria and Argentina, with P&G intending to transition Nigeria into an import-only market, effectively dissolving its on-ground presence.
Explaining the rationale behind the decision, P&G emphasised that this move would enable the company to concentrate on markets with the highest potential. When questioned about the impact on the overall group’s portfolio, Schulten assured that the $50 million net sales business in Nigeria, compared to the company’s $85 billion overall portfolio, would not have a material effect on the group’s balance sheet in terms of sales or profitability.
Despite President Tinubu’s reforms aimed at attracting foreign investment into Nigeria, this move by P&G follows a trend in the Nigerian market, with other foreign USD-denominated companies, such as GSK, in August, also ceasing operations due to challenges associated with repatriating U.S. dollars. The Central Bank of Nigeria’s backlog of approximately $7 billion in forex contributes to the difficulties faced by such companies.
The move will undoubtedly hurt Nigerians as similar pull-outs by other big manufacturers such as Sanofi have led to an increase in the price of commodities as well as mass loss of jobs.
