P&G, one of the world’s largest consumer goods companies, recently announced its decision to leave Nigeria, putting the jobs of 1,800 workers at risk. This move comes as a shock to both employees and the Nigerian economy, as P&G has been operating in the country for over three decades. The company cited the challenging business environment, including rising inflation, foreign exchange restrictions, and supply chain disruptions as the main reasons for its departure.
The loss of such a significant player in Nigeria’s economy is undoubtedly a blow to the country’s workforce and overall development. P&G’s presence in Nigeria has not only provided employment opportunities for thousands but has also contributed to the local economy through tax revenues and increased consumer spending. The departure of P&G could have a ripple effect, with further implications for other companies operating within the country.
P&G are the producer of popular products like Ariel, Bonux, Pampers, Always Sanitary pad and Vicks in Nigeria. This development is coming a few months after global biopharma company, Glaxo-SmithKline Beecham (GSK) similarly closed its operation in Nigeria.
The Chief Financial Officer of the group Andre Schulten cited difficulty in doing business in Nigeria as a dollar-denominated organization and the macroeconomic reality in Nigeria as factors responsible for its latest strategic decision. He stated this during his presentation at the Morgan Stanley Global Consumer & Retail Conference.
“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. “So, with that in mind, we are announcing a restructuring program with the intent to adjust the operating model and adjust the portfolio to ensure that we maintain the portfolio discipline that has brought us to this point. The restructuring program will largely focus on Nigeria and Argentina. We’ve announced that we will turn Nigeria into an import-only market, effectively dissolving our footprint on the ground in Nigeria and reverting to an import-only model” he stated.
He further explained that the decision will help the company to focus on markets that have the highest potential. Findings from Arbiterz reveals that Procter & Gamble, Surest Foam Limited, Mufex, Framan Industries, Moak Industries, Deli Foods, Stone Industries, MZM Continental and Nipol Industries are among companies that have shut down fully or partially in recent years.
The Nigerian government must consider this development as a wake-up call to address the underlying issues hindering the growth and sustainability of businesses in the country. Policy reforms must be put in place to create an enabling environment for both local and international companies to thrive. Improving infrastructure, streamlining bureaucracy, and ensuring a stable exchange rate are just a few crucial steps that need to be taken to attract and retain foreign direct investment, ultimately leading to job creation and economic growth.