Procter & Gamble (P&G), a global consumer goods giant, has encountered significant challenges in its Nigerian operations, resulting in the termination of manufacturing activities in the country. The company’s decision to halt production and transition to an import-only model reflects the increasingly arduous landscape for foreign businesses in Nigeria.
The company’s chief financial officer (CFO), Andre Schulten, emphasized the difficulties of creating value in Nigeria as a U.S. dollar-denominated business. The prevailing economic conditions in Nigeria have contributed to an exodus of foreign companies, with P&G joining the ranks of multinational fast-moving consumer goods (FMCG) companies such as GlaxoSmithKline, Unilever, and Sanofi-Aventis in reshaping their Nigerian manufacturing strategies.
P&G, renowned for iconic brands like Ariel, Safeguard, Oral-B, Always, Pampers, and Gillette, has grappled with the impact of the dollar crisis, which has led to a substantial foreign exchange loss for top Lagos-listed FMCGs.
The troubled timeline of P&G’s operations in Nigeria dates back to 2018 when the company made the decision to close its factory at the Agbara Industrial Estate in Ogun State, a mere year after its inauguration. The closure resulted in the displacement of 120 workers, signifying a substantial setback for the local workforce. The company’s investment in the Agbara plant, amounting to approximately $300 million, underscored its commitment as the largest non-oil investment by a U.S. firm in Nigeria at the time.
While citing government restrictions on raw material imports, high input costs, and intense competition, insiders revealed the multifaceted challenges that precipitated the closure of the Agbara facility. The subsequent sale of one of its plants in Ibadan, which exclusively produced Vicks lozenges, further underscored the complexities P&G faced in maintaining viable operations in Nigeria.
P&G has undergone a series of strategic shifts, including the restructuring of its Nigerian operations in 2018 and the subsequent closure of the Agbara plant. While expressing a long-term commitment to Nigeria’s growth story, the company continues to grapple with operational complexities, including the outsourcing of manufacturing and the discontinuation of popular brands like Vicks Lemon Plus.
Despite affirming its belief in Nigeria’s potential, P&G’s challenges persisted, as the company’s operations at the Ibadan plant slowed to a minimal level, with the production of Ariel detergent representing its sole functional output amidst operational uncertainties.
The ongoing struggles faced by P&G in Nigeria serve as a poignant reflection of the formidable hurdles confronted by multinational corporations in emerging markets. As P&G navigates the evolving Nigerian business landscape, its experiences underscore the complexities of operating and sustaining manufacturing activities in the country.
This troubled timeline illuminates the intricate interplay of economic, regulatory, and competitive factors that have contributed to P&G’s operational challenges in Nigeria, offering a compelling insight into the trials faced by foreign companies seeking to establish a foothold in the dynamic African market.
