Last week, there were fears that a leading home-care product maker, PZ Cussons, will be pulling out of Nigeria following a false viral report on the internet. The company’s Chief Executive Officer (CEO) for Nigeria, Christos Giannopoulos, has since dismissed the report, assuring Nigerians that the company has no such plans.
Backstory: In his response, Giannopoulos, described the story on social media as false along with a headline which read: “Nigeria PZ Cussons to withdraw amid tough conditions.”
“While these conditions prevail, we will maintain our strong market shares in key product categories in Nigeria until growth returns to the market,” he said.
The market conditions Giannopoulos alluded to in his statement is what the Financial Times has described as “subdued consumer spending in Nigeria” which has led to a cut in profit for PZ to about £5.5m.
Notwithstanding, Giannopoulos said that in about 120 years of doing business, the company has “faced different conditions and come out stronger at the end of each phase.”
Hard times for companies operating in Nigeria: While PZ may not be pulling out of Nigeria, several companies and businesses have partially, and some completely, done so since 2015.
As at late 2018, two international banks, HSBC and UBS, closed their operations in Nigeria. While no specific reason was cited for the departure of both banks, it is worth noting that HSBC predicted that the economy would be stunted if President Muhammadu Buhari wins his reelection bid in 2019.
Additionally, only a year after commissioning its largest Nigerian plant, Procter & Gamble (P&G) set out to shut the plant in July 2018. Reports held that the company was battling with the challenge posed by government policies which regulate the importation of raw materials for its production processes.
Nigerian companies have not particularly fared better than their international counterparts. In 2016, Erisco Foods Limited shut down its tomato manufacturing business in Nigeria blaming escalated costs as a result of an unfavorable operating climate.
Similarly, Transcorp Plc exited its juice concentrate business, Terragro, in 2018. The management disclosed that importing concentrate was a cheaper option than producing it locally, and so the 26,500 metric tonne capacity fruit plant had to be shut down. Terragro provided fruit concentrates for Coca-Cola.
Why It Matters: The Nigerian economy is under-performing. Something needs to change fast no matter who ends up as president this month. The sluggish economy and the fact that Ghana now receives more Foreign Direct Investment (FDI) than Nigeria is proof of the sorry state of things.