Procter & Gamble Shifts Strategy: Dissolves Ground Operations in Nigeria, Adopts Import-Only Model

 In a strategic move, consumer goods giant Procter & Gamble (P&G) has announced its decision to dissolve on-ground operations in Nigeria, opting for an import-only business model. This significant shift in approach was revealed by Andre Schulten, Chief Financial Officer of P&G, during his presentation at the Morgan Stanley Global Consumer & Retail Conference.

According to Mr. Schulten, P&G attributes the decision to the challenging nature of conducting business in Nigeria as a dollar-denominated organization. The prevailing macroeconomic conditions in Nigeria have influenced this strategic pivot, prompting the company to reevaluate its operational landscape.

In Mr. Schulten’s own words, “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.”

As part of a broader restructuring program, P&G is set to refocus its efforts on markets with the highest potential, and this program will be particularly concentrated on Nigeria and Argentina. The company aims to transform Nigeria into an import-only market, effectively dismantling its physical presence in the country.

Addressing concerns about the impact of this restructuring on the overall group’s portfolio, Mr. Schulten emphasized that Nigeria contributes approximately $50 million in net sales to the company. In contrast to the company’s extensive portfolio, valued at $85 billion, P&G does not anticipate any significant material impact on the group’s balance sheet in terms of sales or profitability.

This move aligns with a broader trend of foreign USD-denominated companies facing challenges in Nigeria’s current macroeconomic landscape. In a similar vein, drug maker GSK had announced in August its cessation of operations in Nigeria, appointing a third party for distribution.

The difficulties in repatriating U.S. dollars from Nigeria have been acknowledged by these companies, with the Central Bank reporting a forex backlog of approximately $7 billion. Despite President Tinubu’s efforts to implement reforms aimed at attracting foreign investment, the short-term consequences appear to have intensified economic challenges rather than alleviating them. The shifting strategies of multinational corporations like P&G underscore the complex economic dynamics at play and the ongoing challenges faced by businesses operating in Nigeria.