The decision by Procter & Gamble to discontinue manufacturing operations in Nigeria, opting for an import-only model, is indicative of a broader trend that may see more companies shutting down due to the ongoing forex challenges.
This is according to experts who spoke to Sunday PUNCH.
The American company said it was shutting down manufacturing operations due to challenges operating as a dollar-denominated organisation and attributed its strategic shift to the macroeconomic conditions in Nigeria.
The Chief Financial Officer of Procter & Gamble, Andre Schulten, who announced this information at a conference in New York, revealed that the company had a portfolio valued at $85bn with Nigeria contributing $50m in net sales.
At least five multinationals have winded down operations in Nigeria in the last 10 months.
One of these firms is GlaxoSmithKline Consumer Nigeria – the firm announced plans in August to exit the country after 51 years of operations.
Speaking with Sunday PUNCH, the Chairman of the Nigerian Association of Small and Medium Enterprises, South-West region, Solomon Aderoju said Nigeria should expect more exits of companies due to the challenging business climate.
According to Aderoju, P&G imports some of the raw material for manufacturing which will be at a very high cost due to the high exchange rate.
He said, “Nigeria should expect more exits if nothing is done to make the business environment conducive. P&G is not the first to leave, more will leave.
“They have many reasons; it could be because of high inflation, high exchange rate, and insecurity, the problems are humongous,” he said.
The Director General of Lagos Chamber of Commerce and Industry, Chinyere Almona, said in a note to Sunday PUNCH, “Over the last few months, there has been a consistent increase in exit plans or a reduction in involvement in the Nigerian market by the multinationals, and this trend is worrisome.”:
