Procter & Gamble (P&G), a major multinational company, is set to depart, potentially leading to the loss of more than 5,000 jobs.
This departure follows closely on the heels of GlaxoSmithKline Consumer Nigeria's announcement of plans to exit after a remarkable 51-year presence in the country.
Muda Yusuf, the Chief Operating Officer of the Centre for the Promotion of Private Enterprise (CPPE), highlighted the challenges faced by foreign businesses in Nigeria, citing intensified industry competition and declining consumer purchasing power as major factors contributing to P&G's decision.
"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," Yusuf stated.
P&G confirmed its shift to an import-only model in Nigeria, attributing the decision to unfavorable macroeconomic conditions. Andre Schulten, P&G's Chief Financial Officer, explained the difficulties in creating U.S. dollar value in markets like Nigeria and Argentina, affecting the company's operations.
Despite P&G's previous investments in Nigeria, including a $300 million ultra-modern plant in Ogun State in 2017, the company faced operational restructuring and subsequent closure in 2018, leaving a missed opportunity for job creation and economic development.
This exit contributes to the growing trend of multinational companies leaving Nigeria due to the challenging operating environment.
Factors such as rising interest rates, inflationary pressure, and foreign exchange volatility have significantly impacted input costs, operating expenses, and overall business profitability.
The Manufacturers Association of Nigeria (MAN) reported a surge in job losses in the manufacturing sector, attributing the trend to an unfriendly business environment stemming from policy changes and currency challenges.
Eke Urum, founder of RiseVest, acknowledged the challenges ahead, stating, "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."
P&G's departure adds to the growing list of multinational companies exiting Nigeria, including Surest Foam Limited, Mufex, Framan Industries, MZM Continental, Nipol Industries, Moak Industries, and Stone Industries.