In a significant development, Procter & Gamble (P&G), a multinational consumer goods giant, has announced its exit from Nigeria, potentially leading to the loss of more than 5,000 jobs and a substantial decline in foreign investments in Africa’s most populous nation.
The decision follows in the footsteps of GlaxoSmithKline Consumer Nigeria, which disclosed plans to exit the country after 51 years of operations earlier this year.
Muda Yusuf, the Chief Operating Officer of the Centre for the Promotion of Private Enterprise (CPPE), highlighted that intensified industry competition and a decline in consumer purchasing power were the primary factors influencing P&G’s decision. He emphasized the challenges posed by the recent devaluation of the naira, reflecting the current economic reality in Nigeria.
Finance coach Kalu Aja warned of dire consequences for Small and Medium Scale Enterprises (SMEs) if the current economic conditions persist, stating that the economic implications are more severe than an atomic bomb.
P&G, with a presence in Nigeria for over 30 years, plans to transition its operations in the country to an import-only model due to unfavorable macroeconomic conditions. Andre Schulten, P&G’s Chief Financial Officer, cited difficulties in operating and creating U.S. dollar value in markets like Nigeria as a contributing factor.
The company, known for brands like Always, Ariel soap, and Oral B toothpaste, had invested millions in the manufacturing sector, including the completion of a $300 million plant in Agbara, Ogun State, in 2017. However, the plant was shut down a year later as part of a restructuring move.
Despite the substantial impact on the Nigerian job market, Schulten noted that the country represented a $50 million net sales business out of P&G’s overall portfolio worth $85 billion. This revelation raised questions about the significance of P&G Nigeria within the company’s global portfolio.
The exit has raised concerns about the broader business environment in Nigeria, with other companies in the fast-moving consumer goods industry facing similar challenges. Over the past seven years, several manufacturers have either left the country or ceased production due to rising interest rates, inflation, and foreign exchange volatility.
The Manufacturers Association of Nigeria (MAN) reported a significant increase in job losses in the manufacturing sector, attributing it to unfriendly business policies and the impact of currency redesign.
The economic challenges in Nigeria, including the removal of petrol subsidies, naira devaluation, and rising inflation, have triggered a domino effect on businesses, further weakening consumer purchasing power.
As multinational companies reevaluate their positions, local experts urge a focus on increasing local input through backward integration and call for government intervention to stabilize the foreign exchange market. The ripple effects of P&G’s exit highlight the urgent need for sustainable economic policies to support both local and international businesses operating in Nigeria.
