American multinational company, Procter & Gamble (P&G) has announced its exit from Nigeria. The popular consumer goods company is now transitioning to an import-only model.
The shift will significantly impact the Nigerian economy, consumers and P&G itself. The multinational company announced this major change in its operations during a 39-minute webcast on their website on Wednesday.
The maker of iconic brands, including Pampers, Gillette, Ariel, Always and Oral-B, said they could incur charges anywhere between $1 billion and $1.5 billion after-tax from restructuring its operations in Nigeria and Argentina, two markets where the business has been problematic for them.
Andre Schulten, P&G’s Chief Financial Officer, explained at the Morgan Stanley Global Consumer & Retail Conference in New York that the company’s decision to exit Nigeria was driven by the difficulty of operating as a dollar-based organization in the country’s challenging macroeconomic environment.
Despite being a $50m net sales business in Nigeria, P&G, with an $85bn overall portfolio, said that it expected minimal impact on the group’s balance sheet in terms of sales or profitability.’ Schulten said:
“The other reality that arises in some of these markets is that it gets increasingly difficult to operate and create US 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 programme 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 programme 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.”
The American multinational joined a growing list of multinationals to leave Nigeria in 2023.