In the wake of widespread discontent over soaring drug prices following GSK’s departure from Nigeria, another major player, Procter & Gamble (P&G), is poised to exit the Nigerian market, adding to the country’s economic woes.

During the Morgan Stanley Global Consumer & Retail Conference, P&G’s Chief Financial Officer, Andre Schulten, announced the company’s decision to dissolve its on-ground operations in Nigeria. Citing the challenges of operating as a dollar-denominated organization in Nigeria’s complex macroeconomic landscape, Schulten emphasized the growing difficulty of creating U.S. dollar value in such markets.

“The other reality that arises in some of these markets is that it gets increasingly difficult to operate and create U.S dollar value. So when you think about places like Nigeria and Argentina, it is difficult for us to operate because of the macroeconomic environment,” explained Mr. Schulten.

In response to these challenges, P&G unveiled a comprehensive restructuring program aimed at adjusting its operating model and portfolio. The primary focus of this program will be on Nigeria and Argentina, with Nigeria transitioning into an import-only market. This strategic move aligns with P&G’s goal of concentrating efforts on markets with the highest potential.

Addressing concerns about the impact of the restructuring on the company’s overall portfolio, Schulten assured that Nigeria, accounting for a $50 million net sales business, is a relatively small component of P&G’s extensive $85 billion portfolio. Consequently, the company does not anticipate any significant material impact on its balance sheet in terms of sales or profitability.

P&G’s decision to shift its focus away from Nigeria reflects the ongoing challenges faced by foreign USD-denominated companies in the country. The unfavorable macroeconomic conditions have already driven other major players, such as drug maker GSK, to cease operations in Nigeria. GSK opted to appoint a third party for distribution due to the difficulty of repatriating U.S. dollars.

It is crucial to note that these challenges are not unique to P&G but are symptomatic of the broader economic issues prevailing in Nigeria. The Central Bank’s acknowledgment of a forex backlog amounting to around $7 billion further underscores the difficulties faced by foreign companies operating in the country.

As P&G charts a new course, it highlights the need for a robust and adaptive business strategy in the face of evolving economic conditions. The company’s restructuring is not merely a response to challenges but a proactive step toward optimizing its operations and maintaining portfolio discipline. In doing so, P&G aims to position itself for success in markets where it can thrive despite the prevailing economic headwinds.