Reasons why P&G is leaving Nigeria 2024: earlier this week, at the Morgan Stanley Global consumer and retail conference, the Chief financial officer of P & G Mr. Andre Schulten in his speech made it clear that the P & G company will discontinue the manufacturing of its products in Nigeria and Argentina and reverting to import-only business model.
In his speech, talking about why P&G is leaving Nigeria, he emphasized how difficult it is for the company to make such a decision, especially in Nigeria but it was best for the company for strategic reasons..
Not to forget that in 2017, P & G launched one of their manufacturing Plant in Ogun state with an estimated sum of about USD 300 million.
The big question is why is P and G stopping discontinuing manufacturing operations in Nigeria and reverting to an import-only mode of operation.?
Recall also that GlaxoSmithKline (GSK) a leading global healthcare company left Nigeria and reverted to the same import-only business model.
Some of the well-known products of P & G are Pampers, Oral B, Gillette, Always, Charmin, Safeguard, Ariel, Ambi Pur, and so on.
In this article, I will be discussing the reasons why P & G is leaving Nigeria as stated by the Chief Financial Officer in the just concluded Stanley Global consumer and retail conference.
However, within the article, there are a couple of questions that are disturbing concerning the existence of P&G in Nigeria.
8 Reasons Why P&G Group Is Discontinuing Manufacturing Operation and Reverting To Import-Only Business Model
1. Difficulty in operating and creating US Dollar Value
2. Nigeria’s Current Negative Macroeconomic condition
4. To Focus on Countries with the highest economic potential
5. No anticipated material impact on P & G Group balance sheet from a sales and profitability standpoint
6. High cost of Manufacturing its products.
7. High Tax rate imposed on P & G products.
8. Maintain portfolio discipline of the company and its products.
Effect Of P&G Leaving Nigeria
Since P&G Group is reverting to an import-only business model in Nigeria, there are high possibility of the prices of their goods Increasing drastically.
Also, P&G leaving Nigeria is a bad signal to any potential foreign investor seeking to invest in Nigeria.
No foreign investor will want to invest in any country that global companies are leaving gradually.
Remedy Of The Negative Effect Of P&G Leaving Nigeria
The best remedy to solving this problem is For the Nigerian government and Investors to encourage and invest in local companies in Nigeria manufacturing the same product as P&G.
However, it’s going to be a long run, because these companies lack sufficient infrastructure for local manufacturing of these products.
Additionally, the high cost of electricity has been charged.
Some of these companies that previously reverted to fueling and unfortunately left stranded since the removal of fuel subsidies by the Nigeria president, Bola Ahmed Tinubu on the day of his swearing-in.
This effect always results in a high cost of production which in turn bounces on the masses which are the consumers in the form of a “High Price”.
However, there are ways this current government can encourage and support local manufacturers.
The ways they can do this include;
- Sufficient Basic Infrastructure for Manufacturing
- Providing constant and affordable electricity
- Subsize the cost of diesel and fuel for these local manufacturers
- Reduce the cost of raw materials
However, another big question is “How fast can local manufacturers fill the P&G gap in terms of quality and quantity?”
For a couple of months, Nigeria’s economy has been unfavorable, especially to the masses. The President, Bola Ahmed Tinubu has been touring around the world seeking foreign investors. However, existing foreign companies and investors are leaving the country.
The big question is “How does he intend to convince foreign investors to come to Nigeria, Whereas Existing ones are leaving Nigeria?”
I would love to hear your opinion and thoughts about P&G’s discontinuity of manufacturing operations in Nigeria and reverting to the import-only business model. You can drop it in the comment session.