Multinationals Exodus Hits Nigeria as GSK and P&G’s Departures Raise Alarms on Tinubunomics

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Procter & Gamble (P&G), a multinational consumer goods giant, is set to exit Nigeria, potentially causing a ripple effect with over 5,000 jobs at risk and a significant drop in foreign investments in Africa’s most populous nation. This move follows GlaxoSmithKline Consumer Nigeria’s decision to exit after 51 years, indicative of a broader trend in the market.

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Muda Yusuf, COO of the Centre for the Promotion of Private Enterprise, highlighted that P&G’s market impact stems from heightened industry competition and weakened consumer purchasing power, exacerbated by the recent devaluation of the naira. Kalu Aja, a finance coach, warned that if this trend persists, Nigeria may lose its Small and Medium Scale Enterprises (SMEs), with imports becoming more attractive due to economic implications.

P&G, operating in Nigeria for over 30 years, plans to shift to an import-only model, citing unfavorable macroeconomic conditions. Andre Schulten, CFO at P&G, pointed to challenges operating in markets like Nigeria, emphasizing the difficulty in creating U.S. dollar value amidst the macroeconomic environment.

Despite P&G’s substantial investments, including a $300 million plant in 2017 that initially provided over 5,000 jobs, the company faces challenges. The recent exit saddened observers, with missed opportunities noted, such as a failed co-investment plan with NNPC in Nigeria’s gas master plan.

Eke Urum of RiseVest sees this as a result of acknowledging exchange rate realities, projecting a tough two years but highlighting the potential for local manufacturing growth. The agribusiness founder questioned the significance of P&G’s Nigerian business within its $85 billion portfolio.

The broader context reveals a trend of multinational companies leaving Nigeria, citing challenges like rising interest rates, inflation, and foreign exchange volatility. Unilever’s cessation of production and job losses in the manufacturing sector further underscore the challenging business environment.

Reforms by the Tinubu administration, including petrol subsidy removal and naira devaluation, contributed to a surge in inflation and weakened consumer purchasing power. The Purchasing Managers’ Index and financial performances of FMCG firms indicate a deteriorating business climate.

Yusuf emphasizes the need for manufacturers to overcome challenges through increased local input and calls on the government to stabilize the foreign exchange market. The economic policies, while commendable in the long term, have posed immediate challenges, according to Dele Oye, national president of the Nigerian Association of Chambers of Commerce Industry Mines and Agriculture.

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