The founder of Stanbic IBTC Bank, Atedo Peterside, said investors who value the rule of law have been running away from Nigeria.
Peterside made this assertion in a statement via his X handle (formerly Twitter) on Thursday.
According to him, businesses that value rule of law, policy consistency, macroeconomic stability, and a level playing field would continue to depart from Nigeria.
He added that only investors who know how to “partner” with politicians would stay.
His comment comes on the heels of multinational manufacturing companies shutting down operations and leaving the country, with the recent announcement by Procter &Gamble (P&G) to stop its manufacturing activities in Nigeria.
Peterside stated, “Another way to look at this @ProcterGamble exit story is that multiple investors who cherish the rule of law, policy consistency, macroeconomic stability, a level playing field, etc. are running away from Nigeria.
“They are being ‘replaced’ only partially by investors who know how to ‘partner’ with politicians and/or game the system through waivers, exemptions, etc.”
P&G is the third multinational to announce its exit from Nigeria after GlaxoSmithKline Consumer Nigeria Plc (GSK) and Sanofi-Avantis Nigeria Limited announced similar decisions.
Recall that the Chief Financial Officer of P&G, Mr. Andre Schulten, recently stated at the Morgan Stanley Global Consumer & Retail Conference that “we have announced that we will turn Nigeria into an import-only market, effectively dissolving our footprint on the ground in Nigeria and reverting to an import-only model.”
Schulten added that “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.
“So with that in mind, we are announcing a restructuring program with the intent to adjust operating model and adjust the portfolio to ensure that we maintain the portfolio discipline that has brought us to this point.”
The P&G, in its 2023 annual report for the fiscal year that ended on June 30, 2023, which was prepared in pursuance of Section 13 or 15(d) of the United States Securities and Exchange Act of 1934, categorically identified conditions that might cause it to remove its operation from any country.
It stated that there would be a “need to de-consolidate or even exit certain businesses in particular countries” where its business, operations, or employees have been and could continue to be adversely affected by “geopolitical conflicts, political volatility, trade controls, labor market disruptions, or other crises or vulnerabilities in individual countries or regions (including) deterioration in the creditworthiness of local governments, particularly in emerging markets.
“Our business could be negatively impacted by reduced demand for our products related to one or more significant local, regional or global economic or social disruptions. These disruptions have included and may in the future include: a slow-down, recession or inflationary pressures in the general economy;
“…reduced market growth rates; tighter credit markets for our suppliers, vendors or customers; a significant shift in government policies; significant social unrest.
“Results of elections, referendums, sanctions, or other political processes and pressures in certain markets in which our products are manufactured, sold, or distributed could create uncertainty regarding how existing governmental policies, laws, and regulations may change, including with respect to sanctions, taxes, tariffs, import and export controls, and the general movement of goods, materials, services, capital, data, and people between countries.
“The potential implications of such uncertainty, which include, among others, exchange rate fluctuations, new or increased tariffs, trade barriers, and market contraction, could adversely affect the company’s results of operations and cash flows.”
It stated further that it is “a global company, with operations in approximately 70 countries and products sold in approximately 180 countries and territories around the world.
“Fluctuations in exchange rates for foreign currencies have and could continue to reduce the U.S. dollar value of sales, earnings, and cash flows we receive from non-U.S. markets, increase our supply costs (as measured in U.S. dollars) in those markets, negatively impact our competitiveness in those markets, or otherwise adversely.
“Moreover, discriminatory or conflicting fiscal or trade policies in different countries, including changes to tariffs and existing trade policies and agreements, could adversely affect our results.”
VANGUARD
