Real reason Dangote shut its tomato factory, sacked 900 workers

More facts have emerged as to why Africa’s richest man, Aliko Dangote, shut down his tomato paste plant in Kano, with about 900 jobs on the line.

The conglomerate cited shortage of dollars and poor sales as reasons.

Reports say dollar scarcity has also seen Dangote cut down on other food businesses such as flour milling, sugar refining and vegetable oil refining.

The closure is coming barely two months after one of the biggest tomatoes firms, Erisco Food, in November, also announced closure of its plant in Lagos, sacking about 1,500 staff.

Read also: Nigeria can’t survive without borrowing –Adeosun

Manufacturers, through their union, Manufacturers Association of Nigeria (MAN) has persistently warned of imminent closure of more firms unless government revisits its policy leading to dollar shortage.

“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 manager with Dangote group said.

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

Dangote’s plant opened only last year amid much talk from stakeholders predicting a new era of Nigeria producing its own tomato paste, displacing costly imports.

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

Nigeria consumes more than 2.5 million tonnes of tomatoes annually, but manufactures said the porous borders has seen more than 70 per cent of the paste come in as imported items.

The Nigerian recession and scarcity of dollar have led to loss of about 60 per cent local production capacities of manufacturing firms, with more than 4.6 million job losses.

Manufacturers 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 50 per cent premium.

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