Just three days after announcing its decision to leave the African nation, Kimberly-Clark has begun laying off employees.

Nearly 90% of the company’s Nigerian workforce has been let go, according to an anonymous source familiar with the situation.

A company-wide meeting last Friday informed roughly 150 workers of the layoffs. Kimberly-Clark’s Nigerian operations were known for their relatively small size due to automation and outsourcing practices. 

Sales and distribution were handled by Multipro, while Maersk, the Danish shipping giant, managed imports and exports.

The remaining employees will be laid off upon completion of the company’s exit from Nigeria. 

While no specific timeline was initially provided, the company’s actions reveal a rapid closure. This includes writing off a $100 million investment in a Lagos manufacturing facility opened in 2022. 

Huggies and Kotex products will no longer be manufactured or marketed in Nigeria.

Kimberly-Clark attributed its exit to “recently refocused company strategic priorities globally as well as economic developments in the country.”

Its departure, after nearly 15 years in Nigeria, reiterates the challenges manufacturers face in the nation. These struggles include low consumer spending power, high electricity costs, and difficulty obtaining foreign exchange.

Kimberly-Clark’s exit joins a growing trend, with multinationals like Unilever, GSK, and PZ Cussons having scaled back or entirely exited Nigerian market segments due to similar challenges.

The economic downturn in Nigeria, leading to high energy costs, rising raw material prices, and weak consumer demand, is the reason for the sudden decision by Kimberly-Clark, resulting in the closure decision.

Reports revealed that production has been below capacity since late 2023 due to these economic difficulties. This comes after a previous closure in 2019, followed by a restart in 2021. The company initially enjoyed strong sales growth upon reopening, but the economic situation has greatly impacted its operations.

The high cost of running the factory is a major issue. Reports also note that the company spends over N500 million monthly on fixed operational costs, with an additional N100 million just for powering the gas generators. This, coupled with reduced production schedules — down to four days a week — has highly affected profitability.

The reliance on imported raw materials further heightens the problem. With the rising cost of these imports, combined with the weakening Naira, Kimberly-Clark is unable to keep up. The company initially set aside funds for operations, expecting Nigerian revenue to sustain them within five years. However, the current economic reality offers a difficult environment.

Last year, another major player in the personal care industry, Procter & Gamble (P&G), closed its Nigerian production facility after investing a huge sum (around $300 million). PZ Cussons is also evaluating strategic options for its Nigerian business, pointing at a need to maximize shareholder value.

The potential closure of Kimberly-Clark’s factory deals a huge blow to the Nigerian government’s efforts to attract foreign direct investment. It also reiterates the challenges faced by manufacturers in the real economy. 

With two of the top three diaper and personal care producers potentially exiting in the last year, issues are rising about the impact on consumers.

If Kimberly-Clark follows P&G’s lead and transitions to an import-based model, it could further inflate the cost of huggies and sanitary products for Nigerian households. This would occur at a time when the Naira’s depreciation is already placing a strain on purchasing power and when the government is pushing for increased local production.