Anyone who has read the Financial Times publication of November 25, 2015 titled “Harvard graduate works to enjoy sweet paste of success”, in which it narrated the story of Mira Mehta, a 31-year-old Harvard Business School graduate who has planted tomatoes on three hectares of leased land in Nasarawa State and plans to manufacture tomato paste locally through her start-up, Tomato Jos, would easily agree that the London-based newspaper did a good job of it. The author of the piece had stated that “[a]lthough more than 200,000 Nigerian farmers grow tomatoes, not one of the more than 50 tomato paste brands for sale is made from their produce” and that “multinationals such as Olam, the Singapore-based commodities trading house, bring in shipping containers of paste made from tomatoes grown in California and China, with only final stage processing done in Lagos”.
The snag in that report, however, is that while the FT struggled to make a big deal of what Mehta was trying to do, it ignored the efforts of a couple of local Nigerian manufacturers who have been working hard over the years, perhaps long before Mehta even thought of Tomato Jos, to reverse the picture painted above. One of such manufacturers is Sonia Foods Industries Limited.
Sonia Foods, a wholly owned Nigerian company and manufacturer of Sonia Tomato Paste, has in the last five years since it began operation invested over N5 billion in land, machinery and buildings in its tomato paste factory at Asese, Ogun State, where it employs over 224 direct workers and several indirect ones. The company plans to invest additional $6 million-$7 million in the importation of concentrates-making machines and has already engaged some local and foreign agriculture specialists, even as it has got farmlands and has entered into partnerships with a number of states in northern Nigeria with a view to getting larger expanse of land in order to take the backward integration policy which began under the Goodluck Jonathan administration to the next level.
I read a recent interview granted by Nnamdi Nnodebe, group managing director and chief executive officer, Sonia Foods Industries Limited, and I was deeply impressed by what he is doing, which is my inspiration for this piece. In the said interview, Nnodebe, while enumerating the steps he has taken towards backward integration, stated that his plan was to have farms and make sure that local people are busy and employed with significant multiplier effects on the economy.
“You can see what is going on in the oil sector. It is clear that agro-processing and manufacturing are the way to go. We are here to support the government in reducing the impact of oil market crash in terms of creating good jobs to ensure that young Nigerians are busy. We also believe that at some point, we will start exporting tomato to other countries so that we can repatriate foreign exchange. All things being equal, with the right enablement, I think real GDP growth will take a boost thereby bringing about a certain level of recovery,” he said.
To my mind, local manufacturers like Sonia Foods need all the support they can get. One clear way of supporting them is to shield them from undue competition from importers of tomato paste. The government can do this through outright ban on importation or by placing high tariff on imported tomato paste to discourage importation. Unfortunately, successive governments did not seem to have paid any attention, leading to the crowding out of local manufacturers by importers of cheap, sometimes substandard, tomato pastes. One only hopes that the Muhammadu Buhari government would pay the necessary attention to this critical sub-sector.
As Nnodebe rightly contended, “Nigeria as a country needs to make hard choices to get us out of this quagmire, especially at a time where the economy is slowing with strong consequences on the naira which naturally means that the road to recovery will be a rough one. I think the government realises this that’s why the budget for 2016 is hinged on non-oil revenue, with a view to deviating from historical trends. This, however, means that the manufacturing sector, agricultural and mining sectors are areas we really should focus more attention on. That is why we are appealing that an enabling environment be put in place by government to support us in catalysing a more rapid growth for the manufacturing sector,” he said.
Another way of assisting local manufacturers is for governments at all levels to ensure that they have easy access to funds at cheaper and single-digit rate as well as access to forex with which to import raw materials and spare parts. This is why one sees a sense in the appeal by the Union of Tomato Paste Manufacturers in Nigeria for the Federal Government to allow them access to forex to enable them import triple concentrates, the major raw material for the production of packed tomato paste, at least for the time being until their backward integration efforts come to maturity. Currently, all tomato paste manufacturers in the country import triple concentrates, and lack of access to forex is making importation of the raw material impossible. This in turn is having an adverse effect on the local production of tomato paste, invariably giving importers of packed tomato paste a free ride.
“We have begun the process of backward integration in some parts of the country but support for the process is critical to its success. We plead with the relevant government agencies to provide adequate support in terms of easy access to arable land, low interest loans, irrigation facility, technical and also infrastructural support. In the long run, we intend to establish a triple concentrate factory using locally harvested product which would fill up the huge shortage of about 150,000 MT in the Nigeria tomato paste market,” Nnodebe said.
Another challenge for local manufacturers is infrastructure. As Nnodebe noted, he provides virtually everything in his factory – from energy to water and security – which invariably adds to his production cost. This is in addition to the terrible state of the roads.
Indeed, the tomato industry is one of the sub-sectors where Nigeria is highly advantaged. The country is ranked second-largest producer of tomato in Africa and 13th largest in the world, producing 1.701 million tonnes (MT) annually at an average of 6MT per hectare. More can certainly be done. What is required is for government to support local manufacturers like Sonia Foods. Surely, these firms could have been importing but chose to help grow the economy through local production. Government should urgently encourage them through proper legislation, policy consistency, access to arable land, forex, cheap funds and other incentives. Other countries of the world consciously come up with policies to protect their local manufacturers, especially those in a critical sector like foods. Nigeria can certainly do the same.
Nnanna Nwafor
Nwafor, a public affairs analyst, writes from Lagos.
