Consumer goods giant, Procter & Gamble has stated its plans to dissolve on-ground operations in Nigeria and carry out imports only
The Chief Financial Officer of the group Andre Schulten stated this during his presentation at the Morgan Stanley Global Consumer & Retail Conference.
The company explained that it is difficult to do business in Nigeria as a dollar-denominated organisation, and the macroeconomic reality in Nigeria is responsible for its latest strategic decision.
This decision stems from the challenging business environment in Nigeria, primarily attributed to dollar-denominated operations and unfavourable macroeconomic conditions.
Thousands of jobs and millions of dollars in investment will be lost in the country from the company’s 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 America’s 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 it’s ceasing operations in Nigeria and appointing a third party to take over distributions.
Andre Schulten, Procter & Gamble’s Chief Financial Officer, 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 macroeconomic realities.
As a result, the company is implementing a restructuring program to optimize 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 bothering on the effect of the company’s planned restructuring in Nigeria and Argentina on its overall group’s portfolio, the CFO explained that Nigeria is a $50 million net sales business.
Compared to its overall portfolio worth $85 billion, the company does not anticipate any material impact on the group’s 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.
The current macroeconomic conditions in Nigeria have negatively affected foreign USD-denominated companies in Nigeria.
These companies have often cited difficulty in sending back U.S. dollars outside Nigeria.
The Central Bank has acknowledged it has a forex backlog to the tune of around $7 billion, which makes it more difficult for USD-denominated Companies.
Source: Business Day