In a significant blow to Nigeria’s economic landscape, Procter & Gamble (P&G) and Equinor, two major multinational corporations, have announced their exit from on-ground operations in the country. The combined impact of these departures is projected to cost Nigeria a staggering $335 million (approximately N310 billion) in Foreign Direct Investments (FDI).
Procter & Gamble, a prominent American multinational in the Fast Moving Consumer Goods (FMCG) sector, disclosed its intention to shift from local production to exclusive importation of its products. This strategic move is part of P&G’s broader plan to wind down its physical presence in Nigeria, attributing the decision to the challenging business environment and difficulties in creating US dollar value.
Equinor, a global player in the upstream oil sector, has finalized the sale of its Nigerian business, including its stake in the Agbami oil field, to the Nigerian-owned energy company Chappal Energies. Nina Koch, Equinor’s Senior Vice President for Africa Operations, emphasized that this transaction aligns with the company’s strategy to optimize its international oil and gas portfolio and focus on core areas, marking the end of a 30-year presence in Nigeria.
Commenting on the exit, Andre Schulten, Chief Financial Officer of P&G, stated that the decision reflects the challenging business environment in Nigeria and the complexities associated with generating US dollar value.
This latest development follows the trend of multinational companies scaling back operations in Nigeria, with GlaxoSmithKline (GSK) Consumer Nigeria Plc and Sanofi-Aventis Nigeria Limited having withdrawn assets worth over $800 million in the second half of this year. These exits have been attributed to the harsh operating environment in the country.
As Nigeria grapples with the loss of key investors, concerns over the impact on the economy and the need for measures to improve the business climate come to the forefront.
Procter & Gamble Pulls Out
Procter & Gamble, a titan in the Fast Moving Consumer Goods (FMCG) sector, plans to halt local production and pivot exclusively towards importing products. The company’s Chief Financial Officer attributes this drastic shift to a challenging business landscape and the complexities associated with creating US dollar value. The implications of this strategic move are far-reaching, potentially causing job losses and escalating competition among the remaining contenders in the market.
Equinor Divests Its Nigerian Business
Equinor, a key player in Nigeria’s upstream oil sector, has sold its business, including its stake in the Agbami oil field, to Chappal Energies, a Nigerian energy establishment. The company’s Senior Vice President for Africa Operations explains that this decision aligns with their strategy of optimizing their international oil and gas portfolio by focusing on core areas.
Distressing Trend of Divestment
Earlier this year, GlaxoSmithKline (GSK) Consumer Nigeria Plc and Sanofi-Aventis Nigeria Limited, a French pharmaceutical company, also relinquished assets worth over $800 million. They cited Nigeria’s harsh operating environment as the primary cause of their divestment. The departure of these multinational companies underscores the prevailing challenges in Nigeria’s business environment, embodying a distressing trend of divestment that casts a long shadow over the country’s economic prospects.
Peter Obi laments multinational companies’ exit, says Nigeria’s investment profile not attractive
The Labour Party presidential candidate in the 2023 elections, Peter Obi, has once again decried the exit of multinational companies from Nigeria as Procter & Gamble, popularly known as P&G, has announced that it is winding down its on-ground presence in the country.
This is coming a few months after a British pharmaceutical company, GlaxoSmithKline, popularly known as GSK, exited the country.
Reacting to the development, the former Anambra State governor in a series of tweet on his X handle on Thursday evening wrote, “A few months ago, I lamented the exit of one of the top global Pharmaceutical giants, GlaxoSmithKline from Nigeria.
“GSK remains a top global pharmaceutical manufacturer and has had 51 years of operations in Nigeria. The reason for their exit was that there was no longer a perceived growth in Nigeria anchored on productivity.
“Today, Procter & Gamble, the world’s largest personnel care and household products company, makers of iconic brands like Pampers, Gillette, etc. is again leaving Nigeria, for the same reason GSK left.
“Following this also are French pharmaceutical company, Sanofi-Aventis, and top Energy firm, Norwegian behemoth Equinor, which has sold off its Nigerian business development associates.
“Fifteen years ago, P&G, as they are commonly called, viewed Nigeria as a strategic country of importance and invested millions of dollars in an ultra-modern chain supply structure in Agbara which, sadly, is now up for sale.
“The presence of these iconic companies in any economy is not only that they signify trust and confidence, as well as belief in the medium to long-term socio-economic prospects of such countries, but they massively create jobs, invest in Research and Development, as well as pieces of training which smaller players in the industry learn from and adapt.
“They help, to a great extent to develop local talents for both local and global jobs. The exit of these top global companies shows that our medium to long-term prospects strategy is in the negative. Our investment profile is not attractive and our business environment is deteriorating continually.
“The purchasing power of most Nigerians is nose-diving every day. In the face of the absence of the rule of law, and a conducive business environment, it will be difficult to retain such iconic companies and talk more about attracting new ones.
“Governments at all levels in Nigeria must therefore take immediate steps to ensure that institutions of governance are put in place and actively engaging to show that the situation is reversed.
“National greatness and development cannot be pursued in an atmosphere that is scaring away strategic international investors. - PO”
Buy Luxury Apartments on the Island, Lagos
0 Comments