Tycoon Dangote Cannot Get Enough Tomatoes to Operate the Plant Profitably

Nigerian billionaire Aliko Dangote barely manages to operate Africa’s largest tomato processing plant six years after the plant started production because he can’t get enough berries to mash.

Dangote’s 1,200-ton-per-day plant is producing at 20% capacity because farmers do not have enough resources to increase the area cultivated. The factory was supposed to reverse Nigeria’s dependence on imports of tomato paste from China and increase local production. But in 2017, the company had to slow down the plant after pests destroyed large swathes of the crop. It took another two years – and a resolution of a dispute over payment to farmers – for the plant to resume production.

“We have not been able to process a sufficient quantity of tomatoes to ensure the success of our operations,” said Abdulkarim Kaita, general manager of the Dangote tomato processing plant. “At the moment, we are counting the losses.”

The Dangote tomato plant crisis is emblematic of the challenges facing many businesses in Africa’s largest economy. While tomato cultivation employs a valued 200,000 people, banks are reluctant to lend to farmers despite President Muhammadu Buhari’s emphasis on stimulating local production. Such political missteps, entrenched corruption and ethnic tensions discourage the investments needed to create jobs in a country that has one of the highest unemployment rates in the world.

Read: Nigeria’s crater economy could become Africa’s biggest threat

A lack of a clear implementation roadmap with realistic timelines for proper development erodes the expected gains from the government’s attempt to encourage local production, said Segun Ajayi-Kadir, general manager of the manufacturers association. Nigerians.

Nigeria is recovering from its deepest recession in four decades following restrictions induced by a pandemic. But a sluggish recovery and growing insecurity risk exacerbating social tensions, according to the World Bank.

The Dangote plant was to help Africa’s most populous country cut imports of tomato paste from China by 300,000 tonnes by using around 900,000 tonnes of tomatoes lost after harvest each year due to lack of processing facilities. storage and processing. But the farmers were unable to supply the plant with the volumes needed to operate at full capacity.

Read: Nigerian tomato processor pulls out to China over dollar woes

The plant currently processes around 300 metric tonnes of fruit each day, the highest capacity it has reached since 2015, but barely enough to keep the plant operational. Still, it requires the same horsepower and overhead to run at full capacity, Kaita said.

Photographer: Wei Leng Tay / Bloomberg

Tomato processors also cannot import the berries to compensate for erratic local sourcing, as overseas purchases of the fruit are banned along with 50 other products by the Central Bank of Nigeria, which refuses to provide dollars for it. import these items. This policy is also fueling inflation, which accelerated to 22.28% in May, a four-year high.

Meanwhile, tomato farmers cannot get enough credit to increase their production as banks are reluctant to lend for agricultural activities. The tillers were also harangued by armed marauders and kidnappers.

Read: Nigeria restores pasture reserves to end conflict between farmers and herders

“The problem is that our demand for production has not been met so far and we need to increase the volume of supply from farmers,” Kaita said. Most of the tomato growers live in remote villages and therefore it is difficult for vehicles to enter and bring the tomatoes to the factory.

To boost the tomato harvest, the plant is helping farmers by providing them with improved seedlings and encouraging more people to cultivate the product. The move increased the number of farmers from 1,000 to 6,000 in the last harvest season, but the supply was still sufficient to cover 20% of the plant’s capacity, Kaita said. Each farmer can produce at least 40 tonnes per hectare.

The company now plans to create agricultural clusters in the next harvest season and is relying on a central bank proposal to provide credit to farmers to increase production.

Dangote’s $ 17.4 billion in assets make him the richest man in Africa, according to the Bloomberg Billionaires Index. Most of his wealth comes from his cement business. Dangote is now investing $ 19 billion in a petrochemical complex near Lagos.

– With the help of Tope Alake and Gem Atkinson

About Charles Holmes

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