Procter & Gamble, a global leader in consumer goods, has announced plans to transition its Nigerian operations to an import-only model, effectively dissolving its on-ground presence in the country.
This decision stems from the challenging business environment in Nigeria, primarily attributed to dollar-denominated operations and unfavourable macro-economic conditions.
The immediate implication of this is that thousands of jobs and millions of dollars in investment will be lost in the country from the companys move. Having been in Nigeria for over three decades, the firm has invested millions of dollars in the manufacturing sector.
The climax of such investment was the completion of the ultra-modern $300 million plant at Agbara, Ogun State in 2104, making it the United States of Americas largest non-oil investment in the country. According to the firm, during the 2014 plant launch, it provided over 5,000 jobs directly and indirectly through its offices, suppliers and distributors and has created over 200 SME jobs.
This is coming months after drug maker. GSK announced its ceasing operations in Nigeria and appointing a third party to take over distributions.
Procter & Gambles Chief Financial Officer, Andre Schulten, during his presentation at the Morgan Stanley Global Consumer & Retail Conference, noted that operating in certain markets, such as Nigeria and Argentina, has become increasingly difficult due to their macro-economic realities. As a result, the company is implementing a restructuring programme to optimise its operating model and portfolio, focusing on markets with greater potential.
He noted that the decision would help the company focus on markets that have the highest potential.
Reacting to questions bordering on the effect of the companys planned restructuring in Nigeria and Argentina on its overall groups portfolio, the CFO explained that Nigeria is a $50 million net sales business. Compared to its overall portfolio worth $85 billion, the company said it does not anticipate any material impact on the groups balance sheet from a sales or profitability standpoint.
In Nigeria, lingering foreign exchange scarcity, poor power supply, port congestion, multiple taxation, insecurity, and poor infrastructure, among others, have taken a toll on many businesses in the country.
