The exodus of companies and de-industrialization of Nigeria continue with P&G joining the party: “Consumer goods giant Procter & Gamble (P&G) has announced plans to dissolve its on-ground operations in Nigeria and transition the country into an import market. The decision, outlined by P&G’s Chief Financial Officer, Andre Schulten, during a presentation at the Morgan Stanley Global Consumer & Retail Conference, is attributed to challenges in the volatile exchange market and other business-unfriendly issues.”
Nigeria has become a finance-first economy as we watch the old mantra of manufacturing-first playbook fade. Who wants to make anything that is not an app in Nigeria? People, these politicians should wake up because Nigeria is in an economic miry clay right now. This is not a political observation, but a message from a citizen.
Immediately that happened, the Financial Sector became the easiest way to become rich over making things. Between 1989-1992, IBB licensed dozens of finance houses and the leading new generation banks in Nigeria were born within that window (GTB, Zenith, UBA’s STB, Diamond/Access, etc) . As that was happening, SAP sapped Nigeria and rewired the economy to be finance-first, instead of manufacturing-first. From that 1989, the Naira started losing value to USD because our balance of payment and balance of trade began to deteriorate.
This was the outcome when GSK exited: “Following the recent announcement of GlaxoSmithKline’s (GSK) departure from the Nigerian pharmaceutical market, there has been a notable surge in the prices of GSK medications, with increases reported to be as high as 1000%.”
Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
Do you know how many citizens who have to go off-med because of this? Floating the Naira is a sub-optimal policy and I hope Nigeria reverses it. Because you cannot float when you have no life jacket to swim in case something happens.
Context below…
P&G to dissolve ground operations in Nigeria – by Paul Ugbede
Procter & Gamble- P&G, one of the world’s leading consumer goods companies, has announced that it will cease its local manufacturing and distribution operations in Nigeria by the end of the year. P&G has a portfolio of well-known brands such as Ariel, Pampers, Gillette, and Oral-B. The company said that it will transition to an import-only business model, meaning that it will source its products from other markets and sell them in Nigeria through third-party distributors.
The decision comes after P&G faced several challenges in the Nigerian market, such as currency volatility, high inflation, low consumer demand, regulatory uncertainties, and infrastructural bottlenecks. The company said that these factors made it difficult to sustain a profitable and competitive business in the country.
Some of the challenges that P&G faced in Nigeria include:
– High costs of production and distribution: Nigeria is a large and diverse country, with poor infrastructure and logistics. This makes it difficult and expensive for P&G to produce and distribute its products across the country. Moreover, Nigeria has a high inflation rate and a volatile exchange rate, which increase the costs of importing raw materials and finished goods. P&G also faced high taxes and tariffs, as well as regulatory uncertainties and bureaucratic hurdles, which added to its operational costs.
– Low consumer purchasing power and price sensitivity: Nigeria has a large population of over 200 million people, but most of them live on less than $2 a day. This means that many consumers have low disposable income and are very price sensitive. They tend to buy cheaper alternatives or counterfeit products, or switch to other brands when prices increase. P&G’s products are generally perceived as premium or high-quality, but they are also more expensive than those of its competitors. This makes it hard for P&G to attract and retain customers, especially in the mass market segment.
– Intense competition from local and international players: P&G faces stiff competition from both local and international players in the Nigerian market. Some of the local players include Dangote Group, Unilever Nigeria, Flour Mills of Nigeria, and PZ Cussons. These companies have a strong understanding of the local market, consumer preferences, and distribution channels. They also offer lower-priced products that cater to the needs of the mass market segment. Some of the international players include Reckitt Benckiser, Colgate-Palmolive, Kimberly-Clark, and Johnson & Johnson. These companies have global brand recognition, economies of scale, and innovation capabilities. They also offer a wide range of products that compete with P&G’s portfolio.
P&G has been operating in Nigeria since 1992 and has invested over $300 million in its local facilities. The company employs about 1,000 people directly and indirectly and supports several social and environmental initiatives in the country. The company said that it will work closely with its employees, suppliers, customers, and other stakeholders to ensure a smooth and responsible transition.
P&G said that it remains committed to serving the Nigerian consumers with its portfolio of trusted brands, such as Ariel, Pampers, Always, Oral-B, Gillette, and Safeguard. The company said that it will continue to innovate and improve its products to meet the needs and preferences of the Nigerian market.
P&G also said that it will maintain its presence in Nigeria through its regional office in Lagos, which oversees its operations in West Africa. The company said that it will leverage its global scale and expertise to deliver value to the Nigerian consumers and society.
As Naira Hits Record Low, Nigeria Needs To Focus On The Root Cause
---
Register for Tekedia Mini-MBA (Jun 3 - Sep 2, 2024), and join Prof Ndubuisi Ekekwe and our global faculty; click here.