Recession bites harder, Dangote shuts down tomato paste factory over dollar scarcity

- Aliko Dangote has shut down his Tomato paste factory in Kano over lack of availability of dollars to procure raw materials

- The tomato plant may reopen once the company is able to source raw material locally

A Kano based tomato paste company owned by Africa richest man, Aliko Dangote has been shut down due to shortage of dollars needed to import raw materials. A senior executive of Dangote Group of Companies revealed this to pressmen.

According to a report by Reuters, this is the second of such closures in months, in a blow to the Federal Government’s drive to diversify the economy.

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Entrepreneurs claim 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.

Dangote Group executive, Edwin Devakumar told the Reuters that: “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.”

Tomato paste is a staple food in Nigeria but the country imports much of its supplies from China.

Dangote’s Tomato paste company opened just last year amid much talk from officials predicting a new era of Nigeria producing its own tomato paste, displacing costly imports.

Devakumar said the dollar scarcity has also forced Dangote to cut down on other food businesses such as flour milling, sugar refining and vegetable oil refining.

The tomato plant may reopen once the company is able to source raw tomatoes locally, he said.

In November 2016, 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 begin to rot before they get to the market due to poor roads and storage facilities.

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Meanwhile, Dangote’s truck assembly plant is set to begin operation next week. This information was given by a Senior Executive of Dangote’s group of companies, Edwin Devakumar on Wednesday, January 18, while speaking to Pressman.

The plant, located in Lagos, according to Devakumar, costs $100 million and will produce 10,000 trucks annually and employ 3000 people when operation starts.