Erisco Foods tomato paste operations exit Nigeria
The move is an embarrassment for President Muhammadu Buhari, who seeks to diversify the economy and add value to locally grown produce
Photo: Facebook/Erisco Foods
Nation’s No. 1 tomato paste provider, Erisco Foods plans to abandon Nigeria, establish operations in Kenya, Cameroon, Cote d’Ivoire, Ethiopia
By DANA SANCHEZ, Contributing Writer
KADAWA, KANO STATE, Nigeria – It’s cheaper to produce tomato paste in China and export it to Nigeria and other African markets than to produce it locally, according to Nigeria’s No. 1 tomato paste processor, Erisco Foods.
Tomato paste is used widely in Nigerian dishes from jollof rice to soups. Nigeria is simultaneously the world’s 13th largest tomato producer and the world’s largest importer of tomato paste, according to the Harvard Business Review.
Erisco Foods CEO Eric Umeofia said he plans to exit the Nigerian market and set up shop in Kenya, Cameroon, Cote d’Ivoire, and Ethiopia, in an interview with News Agency of Nigeria (NAN).
The news came as a shock to Nigerians. Erisco has the largest tomato processing plant in Nigeria and the fourth largest in the world.
Umeofia said he chose Kenya, Cameroon, Cote d’Ivoire and Ethiopia because it’s easier to do business there than in Nigeria, where a government limit on access to foreign currency is hurting his business. Nigeria has limited access to foreign currency for imports of 41 items including tomato paste. This has given an unfair advantage to foreign tomato paste importers including Lebanon, India, and China, Umeofia said.
Just eight months after Erisco Foods’ tomato paste opened for the market in February 2016, Erisco announced it would close and fire 1,500 workers.
The move is an embarrassment for President Muhammadu Buhari, who seeks to diversify the economy and add value to locally grown produce, NAN reported.
Nigeria is among the top 14 tomato producers in the world, growing about 1.5 million tons of tomatoes a year, but has been forced to rely on tomato puree imports, mostly from China, because of a lack of processing plants.
A May 2016 outbreak of tomato leaf miner moth, aka “tomato Ebola” in northern Nigeria devastated the tomato crop, triggering a state of emergency and pushing up the price of a tomato 400 percent to $0.71.
Africa’s richest man, Aliko Dangote, was also affected by the crisis, according to NAN. His newly opened Dangote Tomato Processing Factory was forced to close temporarily until the next irrigation season, due to a lack of fresh tomatoes. The $20 million facility in Kano state is part of an effort to develop a Nigerian tomato paste industry and diversify the country’s economic base.
Six months later, the Dangote tomato paste factory has not begun operations. Cheap tomato paste imports from China are to blame, said Sani Dangote, vice president of the Dangote Group.
Chinese tomato paste imports are a cheaper option for Nigerians.
“Nigeria is such a huge market for tomato paste that we will find quite challenging to satisfy,” the factory’s general manager, Abdulkarim Kaita, said.
Umeofia said recently he was moving his key manufacturing plant to China. He told NAN that his goal is to manufacture tomato paste in at least 20 African countries. Erisco Foods has had a dominant presence in Liberia and Angola.
In the past, the Nigerian government has helped support local manufacturers such as cement and some fruit producers, Umeofia said. He had hoped the government would support him by banning imports of tomato paste, according to a letter published in newspapers last week.
“(The central bank) refused to give us forex to import machinery, machine spare parts, and raw materials to be used for processing of Nigerian fresh tomatoes into tomato paste in our Lagos factory,” he said. It also stopped the firm from using its own hard currency deposits of $460,000.