Procter & Gamble Nigeria, a global leader in consumer goods, has announced that it will transition its local operations to an import-only model, effectively ending its on-ground presence in the country. The company cited the increasingly challenging business environment, especially the scarcity of foreign exchange, the low spending power of consumers and the high cost of doing business, as the reasons for its decision.
The move will result in the loss of thousands of jobs and millions of dollars in investment that the company had made in Nigeria. In 2018, the company, which employed about 5000 workers, laid off hundreds of staff and shut down its largest plant in Nigeria at Agbara Industrial Estate, Ogun State, just a year after it was commissioned. The $300 million plant, which was the single biggest non-oil investment of the United States in Nigeria, was later turned into a warehouse for imported products and sold.
P&G’s Chief Financial Officer, Andre Schulten, during a presentation at the Morgan Stanley Global Consumer and Retail Conference, noted that operating in Nigeria has become increasingly difficult. As a result, he said, the company was implementing a restructuring program to optimise its operating model and portfolio, focusing on markets with greater potential. He said the decision would help them focus on markets that have the highest potential. He revealed that Nigeria is a $50 million net sales business, compared to its overall portfolio worth $85 billion. He said they do not anticipate any material impact on their balance sheet from a sales or profitability standpoint.
The announcement comes just months after several other multinationals, including GSK, Unilever, Sanofi, Guinness Nigeria and Evans Medical, notified stakeholders of pulling back or stopping operations in Nigeria, citing FX issues and harsh operating environment. Since GSK and Evans pulled out, the cost of their drugs has skyrocketed well beyond the reach of Nigerians.