Forex hitches: Erisco Foods shuts down operations, relocates to China
Erisco Foods Limited yesterday announced the closure of its tomato manufacturing plants in Nigeria, citing an unfavourable operating climate, which has escalated operational costs in recent months.
President/CEO of Erisco Foods Limited, Chief Eric Umeofia, who addressed a press conference in Lagos Tuesday, said the company had concluded plans to relocate the manufacturing aspect of the business to China from where finished products would be imported and sold to consumers in Nigeria and other parts of the world.
According to him, the decision to shut down the Nigerian manufacturing plant was taken after the expiration of a 30-day ultimatum given by the management of the company to the Federal Government to compel the Central Bank of Nigeria (CBN) to make available adequat foreign exchange to assist in the imports of raw materials as well as the requisite equipment needed to keep the manufacturing plants running and also profitable. The company had also urged the Federal Government to compel regulatory agencies like NAFDAC, SON and the Federal Ministries of Agriculture, Industry, Trade and Investment to end the importation and dumping of substandard tomato pastes in the country.
'As from today, November 1, 2016, we have commenced the winding down of our tomato manufacturing business in Nigeria and it's a decision we have taken after the 30-day ultimatum to government expired without our terms being met,' Umeofia said.
'We are moving the factory to China from where we will manufacture and bring back to Nigeria while also selling to other overseas clients. It pays us that way as a business because in recent months, our continuous operation in Nigeria has resulted in a loss of over N3.6 billion.
'Because of the huge machines we have to move out, winding down will last us about nine months as we plan to first exhaust the existing raw materials we have before moving our equipment out to China.
'It's unfortunate that out of a workforce of about 2,000 Nigerians that we have, we will be disengaging about 1,500 of these workers as we need just about 40 staff to keep the Nigerian company running since what we will now be doing is just restricted to marketing and sales of imported products from our China plant. My business has been deliberately frustrated by the way the CBN has managed forex bidding and allocation.
'They won't give us forex to import machinery, machine spare parts and raw materials for processing Nigerian fresh tomatoes into paste in our Lagos factory and they won't give us approval to use our own money (about $460,000) generated from our foreign operations to import our raw materials.
They won't also check dumping because of the powerful nature of the import cabals. This decision is therefore final and there is no going back on it; nothing will make us to come back even in the future because we have found out that we can import tomato paste into Nigeria and still make huge profits,' he added.
â€ŽHe said the company had similarly abandoned the Katsina State backward integration programme with the Certificate of Occupancy on the 2,400 hectares of land issued to the company returned to the state government.