The Tinubu administration must address mounting economic related problems for the country to stand a chance of retaining foreign investments as more multinationals exit the country over difficult macroeconomic conditions, the Lagos Chamber of Commerce and Industry says.
The first is Nigeria’s unrelenting foreign exchange problem. Others include lack of electricity, port congestion, inflation, multiple taxation, insecurity, and poor infrastructure, among others, the chamber said.
“Further, the chamber urges the government to engage multinational corporations and the business community to understand their challenges and gather input and feedback on policy decisions to collaboratively develop solutions that would forestall the exodus of businesses from Nigeria,” director-general Chinyere Almona said Thursday in reaction to Procter & Gamble announcement it would only import and no longer produce in Nigeria.
“The Central Bank of Nigeria (CBN) should prioritise the stability of the country’s currency and adopt the right policy mix to ensure price stability,” she said.
Latest to quit
P&G, which makes top brands Pampers, Ariel, Gillette, Oral-B and Always, announced Wednesday it would discontinue manufacturing in Nigeria.
The company said it will face significant financial charges totalling up to $2.5 billion over the next two years. The charges are mainly due to the reduced value of its Gillette business (known for razors and grooming products) and the company’s decision to reorganize in Nigeria and Argentina.
P&G is only the latest multinational to exit Nigeria as the country battles its worst economic problems in decades, with the naira losing more than 60% since June, setting up foreign companies to earn less in dollars.
Consumer product maker Unilever announced in March it was ending the production of its homecare and skin-cleansing products in the country.
In August, British pharmaceutical giant GlaxoSmithKline said it would use third-party distribution than continue producing in Nigeria. The prices of major drugs, especially popular antibiotics, have since surged on the decision adding pain to citizens struggling with the worst inflation in 20 years.
What charges will P&G face?
The $1.3 billion charge on the Gillette business means that P&G is acknowledging that the value of this part of their company has decreased, which could be due to various factors like changing consumer preferences or increased competition.
The additional charges of $1 billion to $1.5 billion are related to restructuring operations in Argentina and Nigeria. P&G is essentially adjusting its business strategy in these countries, including selling or changing its fabric and home care business in Argentina and transforming Nigeria into a market where they mainly import products.
These financial adjustments also consider the impact of a stronger U.S. dollar, making it harder for P&G to create value in certain markets. The company expects these charges to affect its financial performance in the fiscal years 2024 and 2025.
In response to this announcement, the company’s shares experienced a 2% decline in early trading, reflecting investor reactions to the news about P&G’s financial adjustments.
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