Can Dangote beat imported tomato pastes in Nigeria’s market?

According to media reports on Sunday, the much-anticipated Dangote Tomato Paste plant located in Kano, northern Nigeria, is now ready for operation. The plant, worth $20 million, is expected to produce about 430,000 tonnes of paste, which is a significant ingredient in most local Nigerian dishes such as jollof rice, stew and soups.

This announcement is a huge sigh of relief for Nigeria, which is already grappling with the drop in the price of oil which is affecting its revenue significantly. Citizens and government officials alike have being clamouring for a diversification of the economy in the country and this includes pushing for a meaningful investment in agriculture such as in the production of tomato paste.

Nigeria is the 14th largest producer of tomatoes in the world, largest producer in sub-Saharan Africa and the eighth largest importer of tomato paste after Iraq and Japan. The country has a significant demand for processed tomatoes but it imports almost half of its tomato paste from China and Italy. Last year, the Director General and CEO of the Raw Material and Research and Development Council (RMRDC), Dr. Husaini Ibrahim, revealed that Nigeria spends about $1.5 billion annually on tomato product-importation from China and other parts of the world.

The Central Bank of Nigeria, in 2014, imposed strict restrictions on foreign currency by denying a list of importers of certain goods from any access to foreign currency and this list includes people involved in the importation of tomato paste. This was done in order to encourage local production of these items, discouraging importation.

Nigeria’s tomato paste industry

The tomato paste industry in Nigeria has been able to grow due to importation from mostly China and Italy. Although the CBN restrictions have been able to reduce importation of these products, the industry is still affected by smugglers who bring it in through the various unmanned borders around Nigeria.

“We have the capacity to meet the demands of Nigeria and export more but there is no market…the substandard products from China and smuggled products have taken a large chunk of our market share,” said Eric Umeofia, Erisco Foods CEO, one of the leading manufacturers of tomato pastes in Nigeria in an interview with the Vanguard.

However, Alhaji Sani Dangote, the Chairman of the newly established Dangote Farms in Kadawa in Kano who spoke in an interview last year, said that the Chinese are becoming jittery because they feel their market will be terminated. In order for them to still have a share in the market they may be forced to cut the price of paste so as to reduce the demand for the Dangote version of the product.

“In order for this not to happen, the government will put in policies or tariff in place so that all these pastes, most of which are substandard, coming into Nigeria can be stopped,” said Alhaji Sani Dangote.

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