Swiss consumer goods giant Nestle will cut 15% of its workforce in Africa, as the company felt the growth of middle class in the region was lower than its estimates.
In an interview with the Financial Times, Cornel Krummenacher, chief executive for Nestle's equatorial Africa region, said the company would cut 15% workforce across 21 African countries, including Kenya, DR Congo and Angola.
"We thought this would be the next Asia, but we have realised the middle class here in the region is extremely small and it is not really growing," Krummenacher said.
Expecting high growth in the region, Nestle invested about $1bn (£640m, €888m) in Africa over the last decade, building a number of new factories. Nevertheless, the company's profitability fell amid stiff competition from local businesses that sell cheap products tailored to individual countries.
So far in 2015, the company closed its offices in Rwanda and Uganda. It is also reducing its product line by half and is likely to close some of its 15 warehouses before September.
Krummenacher said turnover in the region had failed to deliver in line with initial growth forecasts set out in 2008, adding that the company would be lucky to reach annual 10% growth in future years.
"We don't have enough money every month to pay the bills. With these cuts, we hope we will be able to break even next year," said Krummenacher. Nestle had been borrowing from its Swiss headquarters and local banks to pay wages and buy raw material, he claimed.