British consumer goods giant PZ Cussons Plc is contemplating a partial or complete withdrawal from its African operations, with Nigeria and Kenya as its primary manufacturing centers. This move comes as the latest in a series of multinational companies reconsidering their presence in Nigeria due to challenging economic conditions.
The potential exit was announced in a statement by PZ Cussons Nigeria, the local subsidiary, revealing that the parent company has "received a number of expressions of interest for our African business." This development follows the group's disappointing 2024 financial results, which saw a 39.7% drop in net profit, largely attributed to a 57% devaluation of the Nigerian naira against the British pound.
PZ Cussons' struggles in Nigeria mirror those of other multinational corporations that have recently departed or scaled back operations in the country. Notable examples include:
1. Procter & Gamble: The American consumer goods company announced its exit from Nigeria in December 2023, citing difficulties in the business environment.
2. GlaxoSmithKline (GSK): The pharmaceutical giant revealed plans to end its prescription medicines and vaccine businesses in Nigeria in August 2023.
3. Unilever: In March 2023, Unilever announced it would separate its tea business in Nigeria and Ghana, following a global restructuring of its tea division.
4. Sanofi: The French pharmaceutical company disclosed its intention to exit Nigeria in April 2023, transferring its commercial operations to local partners.
These departures highlight the challenging business climate in Nigeria, characterized by currency volatility, regulatory uncertainties, and economic instability. The Nigerian division of PZ Cussons reported its first annual loss in years, amounting to N76 billion, primarily due to a staggering 3,000% increase in foreign exchange losses.
The potential exit of PZ Cussons from Nigeria would mark the end of a long-standing presence in the country, where it has been a household name for decades with popular brands such as Canoe, Premier Cool, and Devon Kings. The company currently holds a 73.3% stake in its Nigerian unit.
As multinational companies continue to reassess their operations in Nigeria, the government faces increasing pressure to address the economic challenges and create a more favorable business environment to retain foreign investment and attract new players to the market.
