In a strategic shift announced at the Morgan Stanley Global Consumer & Retail Conference, consumer goods giant Procter & Gamble (P&G) is set to dissolve its on-ground operations in Nigeria, opting for an import-only business model. The company's Chief Financial Officer, Andre Schulten, cited the challenges of operating in Nigeria as a dollar-denominated organization, pointing to the intricate macroeconomic reality of the country as the driving force behind this decision.
Schulten stated, "It is difficult for us to operate because of the macroeconomic environment. So with that in mind, we are announcing a restructuring program with the intent to adjust the operating model and portfolio to ensure that we maintain the portfolio discipline that has brought us to this point." The restructuring will primarily focus on Nigeria and Argentina, with Nigeria transitioning into an import-only market.
Addressing concerns about the impact on P&G's overall portfolio, Schulten emphasized that Nigeria constitutes a $50 million net sales business, a fraction of the company's $85 billion portfolio. As part of a broader trend, P&G aims to streamline its focus on markets with the highest potential.
The decision aligns with the challenges faced by foreign USD-denominated companies in Nigeria due to current macroeconomic conditions. Other companies, such as GSK, have also ceased operations in Nigeria, highlighting difficulties in repatriating U.S. dollars. The Central Bank acknowledges a forex backlog of approximately $7 billion.
Despite the challenges, P&G remains confident that the strategic shift will not have a significant material impact on its overall balance sheet in terms of sales or profitability. As Nigeria grapples with economic reforms aimed at attracting foreign investment, the short-term repercussions are evident, prompting companies to recalibrate their operational strategies
