On Sunday, 6th of November 2016, it was reported that Africa’s top tomato paste maker, Eric Umeofia, is already making plans to exit the Nigerian market. According to reports, the News Agency of Nigeria (NAN) confirmed this from Eric Umeofia, the CEO of Erisco Foods Limited in an interview, which took place in Lagos on Sunday. Erisco will be opening up shop in Kenya, Cameroon, Cote d’Ivoire and Ethiopia. This is coming about a month after the company threatened to shut down its operations in Nigeria.
Why is Erisco exiting the Nigerian market?
According to Umeofia, he is being forced to exit the Nigerian Market because of the harsh conditions of doing business in the country. The ease of doing business in the four African countries where he hopes to have his plant is very attractive.
While the government has placed a ban on access to foreign currency for the importation of 41 items, which includes tomatoes paste, there are still concerns of undue favouritism. Umeofia lamented that there is so much unjustifiable favouritism to Lebanese, Indian and Chinese businessmen in the allocation of foreign exchange to import tomato pastes and other items.
Surprisingly, Umeofia mentioned that it is even cheaper and more cost efficient to produce in China and then export to Nigeria and other African markets than locally producing in the continent. The unstable policies being made by this administration is also one of the reasons why he closed shop in the country.
This is going to be a big shame for Africa’s most populous Nation, Nigeria, if its own citizen is closing shop in Nigeria in order to open his business in other African countries. Following his exit, the labour market should be expecting about 1500 persons joining the number of unemployed in the country.
The Dangote tomato paste factory story is not different either
It would be recalled that in May, Dangote suspended production in its tomatoes paste factory due to the shortage of tomatoes in the four producing states in the country. Most of the farmlands across Kano, Jigawa, Plateau, Katsina and Kaduna states were affected by the “Tuta Absoluta” pest attack, which destroyed all the tomatoes species in the farms. However, six months after the attack, the Dangote tomatoes paste factory is yet to begin operations. The Vice President of the Dangote Group of Company, Sani Dangote has blamed the extended closure of the plant on the importation of tomato paste from China. Despite the actions taken by the Central Bank of Nigeria (CBN) to stop selling of forex to importers of tomato paste, the influx of the product is still on the rise. He also said that the importation of the product is cheaper than local production because China has dropped the price of the products by 50 percent in order to meet Nigerian demand.
From the complaint of both manufacturers, the question of whether the production of tomato paste will ever be realized is still a big issue of concern. This is due to the fact that the manufacturing of this commodity in the country is not feasible. Despite the CBN restriction on access to foreign exchange to import the commodity, the influx of the product from China is a cheaper option for Nigerians.
Credits: this article was written by Fumnanya Agbugah for VenturesAfrica.com
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