Aliko Dangote has shut down his new tomato
paste plant in Kano due to a shortage of dollars needed to import read more......
raw
materials, a senior executive has said. This is the second of such
closures in months, in a blow to the Federal Government’s drive to
diversify the economy.
President Muhammadu Buhari frequently speaks
of ending Nigeria’s dependency on oil exports by boosting food
production, repeating his mantra: “We must produce what we eat.” But the country is mired in recession and struggling with dollar shortages due to low oil prices.
Entrepreneurs
say the crisis has been worsened by the central bank’s decision 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 per cent 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,” Devakumar Edwin, 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 amid much talk from officials predicting a
new era of Nigeria producing its own tomato paste, displacing costly
imports. The dollar scarcity has also forced Dangote to cut down on
other food businesses such as flour milling, sugar refining and
vegetable oil refining, Edwin said. The tomato plant may reopen once the
company is able to source raw tomatoes locally, he said. In November,
Erisco Food closed a tomato paste plant in Lagos, eight months after
opening it, due to a shortage of hard currency needed to import raw
materials. Some 1,500 staff members reportedly lost their jobs. Erisco
had hoped the government would support local producers by banning
imports of tomato paste, as it had done in the past with cement or some
fruits to help manufacturers. The nation produces around 1.5 million
tonnes of tomatoes a year but the bulk of them begins to rot before they
get to the market due to poor roads and storage facilities.
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