Swiss food major Nestle is reducing its workforce by 15% across 21 countries in Africa as it overestimated growth in the middle class sections.
Nestlé equatorial Africa region CEO Cornel Krummenacher was quoted by the Financial Times as saying: "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."
Figures released by Standard Bank show that volume of middle class was around 15 million across 11 countries, with 800,000 middle class households in Kenya.
So far, the company has closed Rwanda and Uganda offices completely, with plans to shut down few of its 15 warehouses before September this year.
The company is also reducing its product range by 50%.
Nestle said that the sub-Saharan markets are dominated by family businesses which sell cheap products that are made to meet requirements of individual countries in the region. As a result, foreign companies face challenging conditions.
Krummenacher said that the company's turnover failed to meet initial growth forecasts set out in 2008, when Nestle fueled expansion in the region.
Nestle invested around $1bn in Africa during the past ten years.
