Tomato firms stage war with CBN over forex as Dangote packs up
Managing Director of Sonia Foods Industries Limited, and image maker of Tomato packaging companies of Nigeria, Mr. Nnamdi Nnodebe has decried the hurdles in accessing forex for the importation of critical raw materials in the local manufacture of Tomato paste.
This is as Dangote has shut his new tomato paste plant in Nigeria due to a shortage of dollars needed to import raw materials, a senior executive said, the second such closure in months in a blow to official plans to diversify the economy.
Business Hilights recalls that before the end of last year, Erisco Food closed a tomato paste plant in the commercial capital Lagos, eight months after opening it, due to a shortage of hard currency needed to import raw materials. Some 1,500 staff lost their jobs.
Members of the group point accusing fingers at the apex bank, claiming that the crisis has been worsened by the bank’s policy to keep an artificially high exchange rate which has dried up dollar supplies, forcing firms to buy them on the black market at a 40 percent premium.
“Where the foreign exchange is not available, we are cutting down our operations. For example … we had a tomato-based processing plant, we have shut it down,” Edwin Devakumar, a senior executive with Dangote’s business, told Reuters in an interview.
Tomato paste is a staple food in Nigeria but the country imports much of its supplies from China.
Dangote’s plant opened only last year in the northern city of Kano amid much talk from officials predicting a new era of Nigeria producing its own tomato paste, displacing costly imports.
In an interview, Nnodebe said “While trying to heal the economy, the pillars that hold the economy together are being removed. Pillars such as the tomato industry are invaluable to growing a vibrant economy. The total investment in the packing manufacturing sector of tomato paste is about N19 billion. The economy cannot afford to lose such a huge industry that provides millions of direct and indirect jobs for Nigerians. The fact is this industry that grew to be the 13th largest in the world and second largest in Africa might die before the second quarter of next year if the ban on forex is not lifted.”
“The unavailability of tomato paste triple concentrate for the industry will grind production to a halt; meaning millions of people who depend on the industry for their livelihood will lose their jobs or have reduced incomes. The impact of this on the economy will be massive and negative as consumer behaviour will also be influenced leading to low purchase of goods in all sectors, not just tomato. These workers also patronise electronics shops, banks, petrol stations, they pay taxes etc. but they will no longer be able to fulfill all these.”
Statistics show that the value of imported tomato paste in Nigeria used to be about 170 million USD (before the CBN ban on 41 items). The imported triple concentrate tomato paste used as raw material by the packers used to be around $50 million out of the $170 million (2014). The imported concentrated raw material is then further processed in order to make it available for the consumers into products such as consumer packs of tomato paste, ketchup, sauces and others
