A report by Business Day indicates that the departure of Procter & Gamble (P&G), a major multinational company, from Nigeria is poised to trigger the loss of over 5,000 jobs, highlighting a broader trend of foreign businesses exiting the nation.
This follows GlaxoSmithKline Consumer Nigeria’s recent plans to leave after 51 years of operations.
Muda Yusuf, the chief operating officer of the Centre for the Promotion of Private Enterprise (CPPE), emphasized the impact of intensified industry competition and declining consumer purchasing power, citing reasons for P&G’s move.
He also pointed out the challenges posed by the recent devaluation of the naira, illustrating the harsh realities of the Nigerian market.
“The impact of the market on the company’s overall net worth is due to two key factors – intensified competition within the industry and a declining consumer purchasing power. Businesses with foreign exchange exposure are struggling,” he said.
P&G confirmed plans to shift its Nigerian operations to an import-only model due to unfavourable macroeconomic conditions.
Andre Schulten, P&G’s chief financial officer, highlighted the difficulties of creating U.S. dollar value in markets like Nigeria and Argentina, impacting the company’s operations.
The multinational giant, known for brands like Always and Ariel soap, had previously invested millions in Nigeria’s manufacturing sector, including the establishment of a $300 million ultra-modern plant in Ogun State in 2017.
However, the company was shut down a year later, citing operational restructuring, despite its potential to boost job creation and improving Nigeria’s socio-economic landscape.
While the exit might not significantly impact P&G’s overall portfolio worth $85 billion, the move deeply saddened insiders familiar with the company, highlighting missed opportunities for substantial investments in the past.
This departure adds to a growing list of multinational companies exiting Nigeria due to a challenging operating environment.
Rising interest rates, inflationary pressure, and foreign exchange volatility have profoundly affected input costs, operating expenses, and overall business profitability in Nigeria.
The Manufacturers Association of Nigeria (MAN) reported a spike in job losses in the manufacturing sector, attributing the trend to an unfriendly business environment stemming from policy changes and currency challenges.
According to Eke Urum, founder of RiseVest, the exit is an effect of embracing exchange rate reality.
“It’s going to be a rough two years, but local manufacturing is cooking. It’s too small for P&G (their Nigerian business is $50 million out of $85 billion). But for local guys, this is meaningful,” he wrote on X.
Some of the companies that have exited the country are Surest Foam Limited, Mufex, Framan Industries, MZM Continental, Nipol Industries, Moak Industries and Stone Industries.
This is inevitable, base on the fact that an enabling economy can’t sustain import based companies. What Nigeria needs now are establishments that are ready to invest in export and farming equipments.