Story Highlights
- Notable consumer goods companies reduced the workforce in 2023 by up to 8.7% on average with Flour Mills Nigeria Plc the biggest casualty.
- The decline in employee headcount stems from the impact of economic shocks such as inflation and exchange rate depreciation in 2023
- The decline could negatively impact the unemployment rate in the country and the capacity utilisation of companies in the sector.
Fast Moving Consumer Goods (FMCG) companies have seen a reduction in employee headcount in 2023 when compared to the previous year.
A review of the full year 2023 financial statement of some consumer goods companies listed on the Nigerian Stock Exchange (NGX) reveals that in 2023 the employee head count reduced by 1,297 from 14,875 to 13,578. This represents a decline of 8.7% during the period.
Flour Mills Nigeria Plc saw the biggest drop in employee headcount shedding 515 staff in 2023 from 5,919 at the end of the 2022 financial year to 5,404 by the end of 2023. This marks a reduction of 8.70% during the period.
FMN was followed by brewery behemoth, Nigerian Breweries which reduced its employees by up to 14.15% in 2023 from 2,685 employees in 2022 to 2305 by the end of 2022.
Other firms which reduced their employee during the period include;
- Cadbury Plc- in 2022, the company’s total employees stood at 480, this reduced to 459 by the end of 2022 marking a marginal decrease of 4.34% during the period.
- Dangote Sugar- this company’s total number of employees in 2023 decreased by 70 staff from 3066 in 2022 to 2956.
- Guinness Nig Plc- in December 2022, the total employee headcount at Guinness Nig stood at 839. In the same period of 2023, the employee headcount has dropped to 791 indicating a reduction of 48 employees
- Unilever Nig Plc- this company reduced its workforce by a whopping 22.3% in 2023 from 786 personnel by the end of 2022 to 610 by December 2023.
- PZ Cussons- there was a marginal decline in employee headcount in this company. In 2022, the total workforce stood at 1040, this reduced to 996 marking an employee reduction of just 46 staff.
- Northern Nigeria Flour Mills- only three employees left this company in 2023. Its total employee headcount reduced from 60 in 2022 to 57 in 2023.
The decline in employee headcount in 2023 stems from the impact of macroeconomic shocks experienced across the country in the year. Inflation soared from 21.82% in January 2023 and closed the year at 28.92% in December 2023 indicating an increase of 7.1 percentage points.
Furthermore, Naira weakened to an all-time low on the official market following significant reforms by the Central Bank of Nigeria CBN). In January 2023, the naira closed at N460$, this weakened to N907/$ by the end of the year with the exchange rate crossing the N1000/$ mark in the year.
The consumer goods sector was one of the hardest hit sectors of the economic shocks seen in 2023. An earlier analysis by Nairametrics revealed that major consumer goods companies recorded N839.2 billion foreign exchange losses during the year.
The losses incurred by consumer goods companies coupled with the macroeconomic malaise in Nigeria result in significant exits of multinationals in Nigeria. The Manufacturers Association of Nigeria (MAN) had earlier stated that around 767 manufacturing companies closed shop in 2023 and that the sector had over N350 billion worth of inventory unsold in the year.
Furthermore, the association noted that in the first half of 2023 alone, the sector lost over 3,500 jobs during the period.
What this means
The job losses in the consumer goods sector are expected to compound the unemployment rate in the country. While the job losses reported among listed companies seem negligible, those of unlisted companies are much worse.
The National Bureau of Statistics (NBS) revealed that the unemployment rate in the country in Q3, 2023 rose from 4.2% to 5.0%– indicating an increase of 0.8 percentage points.
According to data from the Central Bank of Nigeria (CBN), Purchasing Managers’ Index (PMI) Nigerian businesses even in 2024 were still reducing their workforce in reaction to current economic realities.
The decline in the workforce for consumer goods companies is expected to significantly impact on the capacity utilisation of the sector. The Manufacturers Association of Nigeria (MAN) reports that capacity utilisation in the sector has declined to 56.5%.
For example, Nigeria Breweries earlier this year announced that it is shutting down operations in two of its nine production plants in the country.
Also, Unilever Nigeria Plc had announced in 2023 that it would stop production of its homecare and skincare–cleansing brand segment which included the popular OMO detergent, Sunlight and Lux soaps.
Uncertain outlook in 2024
The fortunes of consumer goods companies in 2024 look uncertain as the symptoms of the macroeconomic malaise experienced in 2023 are still much evident.
Inflation in the year has risen from 29.90% in January to 33.40% coupled with the exchange rate which has seen much volatility and now trading at around N1600/$ on the official market.
