Ensuring survival of local brands through policies

Central Bank of Nigeria mid last year employed restriction on forex as a tool to discourage importation of some items. Since then, some stakeholders have argued that some of the items, including tomato paste should be banned outrightly to encourage local firms and millions of farmers in the country. Daniel Obi assesses the effect of such importation on local industries and national economy.

With abundant resources, Nigeria is destined for greatness and it can only achieve this, if the nation that is heavily import oriented could attempt to reverse this trend. This takes determination, overlooking powerful influences that dot the nation’s character.

  It was therefore inspiring when Aisha Buhari, wife of the President said at the unveiling of tomato new processing plant by Erisco Food Limited recently that it is imperative that government regulatory agencies protect local manufacturers.

“I think we have imported enough. We have to change that culture of importing things we can produce locally. This is part of the change we are talking about that must happen in the country. Local food manufacturers have to be encouraged to grow, as that is the only way to create employment for the people and help local farmers”

In the past, many firms have closed businesses, allowing the laid off workers to join the over 22 million Nigerians who are unemployed due to the harsh operating environment but more importantly due to importation of the local substitutes. Today, it has become ridiculous and absurd as Nigerians hear at different forums that even toothpick is imported in to Nigeria.

Various stakeholders including economists and entrepreneurs have emphasized the critical importance of small and medium scale enterprises in leapfrogging the nation’s economy, a model adopted by China that placed it as one of the world’s economies.  But Nigeria only discusses that route without walking through it. “We don’t walk the talk” states an analyst.

In Nigeria, there appears to be no clear direction and focus of growing the nation’s economy through manufacturing as importers of all kinds of goods, even those that can be manufactured locally are imported thereby frustrating the local firms and dimming the country’s growth forecast.

For instance, there have been debates over the 41 items excluded by CBN last June from accessing foreign exchange at the Nigerian foreign exchange markets in order to encourage local production of those items.  One of those products is tomato paste which falls under vegetable and vegetable products category. While some people favour the action and even call for outright ban, others call for reverse of the order by CBN.

Massive importation of tomato paste killing local firms

In spite of the restriction of forex by CBN for importation of tomato in to the country, there is massive importation already going on. A visit to Seme border last week shows how some Nigerians and non Nigerians are obsessed about bringing in tomato paste in to the country. This is a development that is frustrating farmers and firms involved in processing tones of local tomato.

For instance, the jobs of thousands of workers of Erisco Foods Limited and others are threatened if this trend of importation of tomato continues unabated. Transporters at the Seme border charge about N200 to convey a small carton of tomato to any part in Lagos. Marketers in Cotonou who spoke to BusinessDay said it is a booming business and what seems to have slowed the business now is the further depreciation of Naira. The currency exchanges for N550 to 1,000 Cfa franc against N250 about 4 months ago.

The plan of Erisco to hire up to 50,000 employees in the next two years may not be feasible if government overlooks the threat of continued importation of tomato paste.

Why tomato importation should be banned out-rightly

Analysts have argued that products such as tomato paste should be placed on outright ban instead denying importers access to forex. This is because manufacturing is key to prosperity which other countries have used to grow their economies.

This is even more instructive as analysts said that Nigeria is ranked the second largest producer of tomato in Africa and the 13th in the world with a total production estimated at one million hectares of land producing 1.701 million tones per annum with average of 20-30 tons/hectare. “Yet Nigeria is the largest importer of tomato from China and Italy”. Ridiculous, isn’t it?

It is also said that Nigeria imports about 66,000 tones of processed tomato annually worth over N11.7 billion despite its massive local production.

To stop this trend, save money for Nigeria and employ Nigerians, Erisco decided to set up processing plant and “the benefits of the Erisco Foods revolution in tomato Paste come in many wonderful streams. Firstly, Nigerians will be able to eat fresher and healthier tomato paste proudly grown and made in Nigeria. Since tomatoes are in rich source of Lycopene (which is a major anti-oxidant) adults and children alike will be stronger and better equipped with the nutrients to face the challenges of personal and nation-building. As we know, healthy person is a happy nation! Secondly, Erisco revolution in Tomato Paste production will stop the annual wastages of over 75% of fresh tomatoes across Nigeria”, says Eric Umeofia, President/CEO Erisco Foods Limited during the commissioning of his plant recently.

Tackling unemployment

One of the federal government headaches is the rate of unemployment which National Bureau of Statistics has put at about 10 percent. Agriculture has been seen as a sector that can be used to reduce this rate. This therefore cannot happen if the importation of tomato is not checked.

It is also important  that some companies such as Erisco Foods and up coming Dangote multi-billion tomato processing plant in Kano are prepared to engage more Nigerians on employment on the account of government intervention to limit importation of tomato to allow them thrive

Health implications

The dumping of tomato paste most of which are substandard has negative health implications for Nigerians. The management of NAFDAC had acknowledged that large volume of tomato paste in the market were substandard.

  In a published report, it was revealed that “91.1 percent of the tomato brands studied failed NAFDAC test with virtually all the packaged brands from China being the culprit” The report further quotes officials of the agency as observing that most of the China-made brands contained far less than the required quantity of tomato concentrate “They were rather filled with bulking agents such as starch and then infused with banned colouring which could cause cancer and lead to organ failure.

It was pleasing to hear  that “local tomato paste brands were confirmed to meet the required safety and nutritional standards as NAFDAC has always made regular unscheduled inspections to their production facilities”

Tomato is rich in minerals, carbohydrates and vitamins which can be eaten raw or crushed into juice or made into sauce and used as a good ingredient in the preparation of various types of food and stew. But when starch is used to replace original tomato and coloured it can have negative effect on health.

Growing with determination

Today, China is the toast of the world economy. The 1.3 billion population country was determined as a country. Former CBN governor, Chukwuma Soludo said the “China’s emergence as the potential largest economy has come to many people as ‘surprise”.

Following China economy trajectory, Soludo in a paper presented at University of Benin, said  the question is whether Nigeria is going to be the ‘Next Surprise’ in the global economic growth story. For Nigeria to achieve this growth, it is dependent on the “large amount of work that will be needed if it is to have a serious claim in achieving the potential growth outlined in the new 2050 projections”, Soludo quotes Goldman Sachs.

According to him, the issue therefore is not whether Nigeria has the potential to be the next surprise as China but whether it can do what is necessary to achieve that status.

Baring belated moves, the beginning of that process to consolidate the status as the largest economy in Africa that will translate to quality  of lives for Nigerians and achieving the 12th largest economy in the world by 2050 is now. As Senate President, Bukola Saraki said recently “government has the responsibility to ensure that indigenous manufacturers thrive to build the economy and provide employment.

Government as a matter of urgency should use legislative actions and policy initiatives to protect local industries like Tomato processing plants in the country. It should ban importation of tomato paste to allow local firms grow.

Daniel Obi