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$150mn Erisco Foods finally announces exit on back of FX crunch – Businessday

HomeNews$150mn Erisco Foods finally announces exit on back of FX crunch – Businessday
$150mn Erisco Foods finally announces exit on back of FX crunch – Businessday
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The 450,000 metric-tons capacity Erisco Foods Limited, Nigeria’s largest tomato processor with an investment of $150 million, has announced its planned exit from Nigeria owing to its inability to get foreign exchange with which to import tin plates and concentrates.

The company said it is now moving to China from where it will produce and export back to Nigeria. The company added that it has so far been frustrated by unbridled importation of cheap tomato pastes into the country that are competing better than locally produced ones.

Announcing the exit on Tuesday, Eric Umeofia, president/CEO, Erisco Foods Limited, said he will conclude relocation of his plant to China in nine months, stressing that Erisco products will still remain in the market after the period as the company is gearing up to feature among biggest importers of tomato paste into Nigeria. Umeofia vowed not to return his plants and machinery to Nigeria again, regretting that he has so far lost 3.6 billion to dumping and has inventory worth over N6 billion in his warehouses.

“I have returned all the C of Os of 2,400 hectares of land given to us by Katsina State government,” Umeofia said.
According to him, he buys dollar at N450/$ from the black market to run his company, a situation that makes his products uncompetitive, urging Nigerian consumers that they will continue to see his products in the local market even though they will no longer be with made-in-Nigeria labels.

“We have started disengaging workers. Over 1,500 workers will lose their jobs. The CBN refused to give us approval till date to use our own deposit of $460,000 generated from our foreign operations even before the 41-item FX importation ban, but the same CBN approves Nigeria’s scarce FX to other companies to import substandard products into Nigeria,” he alleged.

Umeofia, who invested $150 million into the tomato industry in Lagos and Katsina, had last month threatened to exit Nigeria in 30 days if the central bank continued to ignore its call to make FX available for the importation of inputs and packaging materials or at least enable it access 60 percent of FX made available in the market for manufacturers.

Erisco exit announcement on Tuesday means the Federal Government, the central bank, the Federal Ministry of Industry, Trade and Investment failed to act fast to save the company that employs over 2,000 workers from leaving the country, thereby opening the door to importers to flood the country with substandard pastes with less than 28 percent tomato content.

Erisco shut-down is coming at a time Dangote tomato processing plant with 1,200 metric tonnes daily capacity in Kano is under lock and key, which Sani Dangote, vice president of the group, attributed to unbridled importation of cheap pastes by over 30 Chinese firms.

Nigeria is the 13th largest producer of tomato in the world and the second after Egypt in Africa, yet the country is still unable to meet local demand because about 50 percent of tomato produce is wasted due to lack storage facility. The country produces 1.5 million tons per annum, with 0.7 million metric tons post-harvest loss, even as tomato demand is put at 2.2 million metric tons per annum.

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