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Markets: Why Procter & Gamble dissolves ground operations, adopts import-only model in Nigeria –Company CFO

*Andre Schulten, Chief Financial Officer (CFO) of Procter & Gamble, reveals in ‘places like Nigeria and Argentina, it is difficult for us to operate because of the macroeconomic environment’ where it gets increasingly difficult to operate and create US Dollar value

Isola Moses | ConsumerConnect

Against the backdrop of the prevailing macroeconomic conditions in the country, Procter & Gamble (P&G), a consumer goods giant, has announced its decision to end on-ground operations in Nigeria and adopt an import-only business model.

ConsumerConnect learnt Andre Schulten, Chief Financial Officer of P&G, revealed the company’s strategic move during his presentation at the recent Morgan Stanley Global Consumer & Retail Conference.

Schulten noted that P&G attributed the decision to the challenging nature of conducting business in Nigeria as a Dollar-denominated corporate organisation.

According to him, the prevailing macroeconomic conditions in Nigeria have influenced this strategic pivot, prompting the company to reevaluate its operational landscape.

Schulten reportedly 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.”

Restructuring the P&G markets in Nigeria, others

As part of a broader restructuring programme, P&G is set to refocus its efforts on markets with the highest potential, and this programme will be particularly concentrated on Nigeria and Argentina, according to report.

It was also gathered the company now aims to transform Nigeria into an import-only market, effectively dismantling its physical presence in the West African country.

In regard to concerns about the impact of this restructuring on the overall group’s portfolio, Schulten emphasised 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, he stated.

This move, report said,  aligns with a broader trend of foreign USD-denominated companies facing challenges in Nigeria’s current macroeconomic landscape.

It is recalled drug maker GlaxoSmithKlime (GSK), earlier August 2023, had announced its cessation of operations in Nigeria, appointing a third party for distribution.

It is equally noted that the difficulties in repatriating US Dollars from Nigeria have been acknowledged by these companies, with the Central Bank reporting a Forex backlog of approximately $7 billion, until the Bank’s recent intervention to release some of their funds for repatriation to home countries.

In spite of President Tinubu’s efforts at implementing reforms towards attracting Foreign Direct Investments (FDIs), the short-term consequences appear to have intensified economic challenges rather than alleviating them, report said.

The shifting strategies of multinational corporations like P&G is said to  underlined the complex economic dynamics at play, and the ongoing challenges businesses face in the country.

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