By Enyichukwu Enemanna
A global leader in consumer goods, Procter & Gamble says it is transiting its Nigerian operations to an import-only model, bringing to an end its 30-year presence in the West African country.
The firm says this is arising from the challenging business environment in Nigeria, particularly the dollar-denominated operations and unfavourable macroeconomic conditions.
The company’s 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 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.
“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,” Schulten stated.
“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,” Schulten said.
He noted that the decision would help the company focus on markets that have the highest potential
In its over three decades presence in Nigeria, 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.
These jobs along with millions of dollars in investment will be lost in the country from the company’s move.
This is coming months after, drug maker GSK announced it’s ceasing operations in Nigeria and appointing a third party to take over distributions.
Reacting to questions around 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.