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Saving the Tomato Processing Industry

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tomato paste - Investors King
  • Saving the Tomato Processing Industry

Recently, the federal government indicated its readiness to lift the forex ban it placed on some 41 items in 2015.

Minister of Finance, Kemi Adeosun, had, in the 2017 Fiscal Policy Roadmap, said the federal government, “will replace administrative measures on list of 41 items with fiscal measures to reduce demand pressure in the parallel market.”

Since the announcement, stakeholders in the industry have been in a dancing mood as the restriction of access to forex in the official window sent many of them out of business.

Also, the demand for tomato paste in Nigeria has outstripped supply ever since the Central Bank of Nigeria (CBN) started implementing the policy restricting 41 items from sourcing forex from its official window. This has led to a massive mark-up of price. Profiteering became the order of the day with substandard tomato pastes flooding the market as unsuspecting consumers suffer the backlash.

Experts believe the health of Nigerians might be compromised with smugglers and sellers of tomato paste desperate to meet the difference between market demand and actual product supply. With the dying local tomato paste industry closer to the verge of extinction, smuggling of substandard tomato paste becomes inevitable to opportunists.

Fake Products

At a joint press conference in Abuja organised by Comptroller General of the Nigerian Customs Service (NCS), Col Hameed Ali (rtd.), and the acting Director-General of National Agency for Foods and Drugs Administration and Control (NAFDAC), Mrs. Yetunde Oni, on the outcome of laboratory tests conducted on the alleged “plastic rice” imported into the country, Oni said the seized rice was, “contaminated with micro-organisms above permissible limit.”

The NCS Comptroller General, who was represented by the Deputy Comptroller-General, Mr. Umar Ilya, said the NCS would continue to do what is possible to rid the country of adulterated products.

While the NCS is doing its best to curb the menace of importers of fake products, analysts believe the best solution to counter the menace is to encourage local production until total ban on the 41 items that excludes Tomato Paste Triple Concentrate from forex interbank is removed.

Stakeholders therefore called on the federal government to remove restriction on forex pending when local production of the material starts and becomes self-sufficient.

According to a top player in the industry, who pleaded anonymity, “Tomato Paste Triple Concentrate is one of the essential ingredients used to manufacture the popular tomato paste. This vital raw material is not produced in Nigeria for now.

“In the mean time before local production of the material starts and becomes self-sufficient, government should not be too much in a haste to throw away the bathwater with the baby thereby creating more problems than solutions. One of such problems is managing fake and substandard influx of finished tomato paste products into the Nigerian market. Local production remains the most viable means of securing maintaining high standard of tomato paste products.”

Product Test

Not too long ago, former Director General of NAFDAC, Dr. Paul Orhii, admitted that 85 per cent of tomato paste brands sold in various markets across Nigeria mostly imported from China were substandard and unfit for consumption, “but they still find their way through the borders of the country.”

The former DG also revealed that 91.1 per cent of the foreign brands of tomato paste failed NAFDAC’s product test.

According to Orhii, the tomato paste was filled with bulky agents such as starch and banned colouring that makes the product look reddish. “But this could cause cancer, organ failure, kidney and liver-related ailments among young and middle-aged Nigerians,” he stated.

Another stakeholder, who does not want his name in print told THISDAY that the federal government would be killing two birds with a stone if it revises the ban on 41 items from forex interbank activities, especially for an item such as Tomato Paste Triple Concentrate.

According to him, “This would ensure people retain their jobs in that sector and those who have already lost their jobs can be reabsorbed as experience is crucial in the production of tomato paste. The demand for Triple Concentrate Tomato Paste is not for itself as a concentrate, but its derived use to add form and utility in the production of finished products such as tomato paste, ketchups and sauces. There is a significant addition of value in the process of conversion and given the capacities that has evolved over time. Nigeria can become the hub of tomato paste re-processing for the surrounding less developed neighbouring countries, thus replacing Chinese finished products imports in these places.”

He added: “Take for instance, cassava that is grown in Nigeria; this crop is used for many other things aside food. Even as food it can be purchased for different kinds of food. Sugarcane is not just for food consumption, it is also used to make ethanol fuel for vehicles and other machineries. Nigeria produces an estimated 1.5 million tons of fresh tomatoes every year, making it the 13th biggest producer in the world. Most of it goes to service the fresh tomato market in the country.

“Tomato paste plays its role, primarily as a substitute for fresh tomatoes, when there is reduced availability of fresh tomatoes; tomato paste variants are used to shore up supply and reduce scarcity. Tomato paste is also a very good way to store tomatoes that would ordinarily go bad in their natural and fresh state being a seasonal crop with Nigeria still lacking adequate storage facilities.

“Nigeria had developed a vibrant local processing industry but the importation of finished tomato paste products over the years has been affecting the growth of the industry. Hence out of the imported $170 million tomato paste in 2014 around $50 million was for the triple concentrate. Since the Triple Concentrate Tomato Paste is not produced locally, this has to be imported and then value added by local processors with benefits such as employment, taxable income to state, production technology, growth of local industry and the country’s economy.”

He added that, it was also virtually impossible to feed the local demand for Triple Concentrate till the local processing industry evolves over time to acquire and execute the required backward integration to make this possible.

He said the U.S, European and Chinese tomato paste industries were examples, which took many years to establish and standardise.

Protest

The decision to include Triple Concentrate Tomato Paste amongst 41 prohibited import goods is still raising dust amongst consumers, labour and manufacturers alike and many have been expressing frustrations over the forex policy.

Director General, Nigeria Employers Consultative Association (NECA), Mr. Olusegun Oshinowo, asked succinct questions in an interview: “What is it that has made the CBN to prohibit tomato paste manufacturers from the foreign exchange that should not be extended to numerous products including petroleum? Right now, NECA is trying to determine how many companies are set for redundancy. This cuts across all sectors.”

He added that, “Petroleum maybe the mainstay of the economy today but the future of that sector looks very bleak as global pricing for crude oil keeps falling. This is perhaps the major reason why the government has intensified its drive to diversify Nigeria’s economy in a bid to shore up the country’s revenue.

“Oil aside, the consistent fall in Naira’s value has not spelt good tidings for entrepreneurs, who have been producing and groaning from the already hostile production environment. Manufacturers especially those in the tomato industry are merely holding on to the last straw as they do business but with the exclusion from forex activities it is tantamount to an execution of the tomato industry.”

On his part, President of Manufacturers Association of Nigeria (MAN), Frank Jacobs, said several of his member companies were presently operating below capacity and only few may be able to survive.

“The forex policy is not just killing the tomato industry but does more than that as it effeminates the purchasing power of the consumer and this consumer impotence is replicated all over the country as they cannot afford to buy because of inflation and loss of jobs. The policy also eliminates the possibility of sales increase as the few people with jobs have to cater for those who just lost theirs,” he said.

According to the President, National Union of Food, Beverages and Tobacco Employees, Lateef Oyelekan, “All the companies involved in the Forex exclusion should be given the latitude to plan for backward integration, as one of the downside of the policy is that it has started leading to massive job loss.”

“Hence the best approach would be a phase-wise implementation which will facilitate local backward integration of the key players through sound and stable policies and support measures. This will also retain and build the local processing capabilities of the downstream re-processing industry, so that in the long-run, not just Nigeria but the entire region can be serviced using local capabilities.

“The CBN, while desperate to get the economy up and running should appreciate that some items cannot be treated with levity. If you take away Cassava, you are not just dealing with Cassava but you are dealing with Garri, fuel made from Cassava, Abacha salad, African Salad and many others. Tomato Paste Triple Concentrate is not just an item on the list but a raw material that goes beyond providing food on the table but also jobs to millions of Nigerians,” he added.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Computer Village Traders Demand Refunds as Lagos State Cancels Katangowa Project

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Traders at the renowned Computer Village in Lagos find themselves in a state of uncertainty following the abrupt termination of the multibillion-naira Katangowa project by the Lagos State Government.

The project, which was aimed at relocating the bustling tech market from its current site in Ikeja to the Agbado/Oke-Odo area of the state, has left traders in a state of limbo.

Despite the cancellation of the project reportedly occurring two years ago, traders claim they were not informed by either the government or the developers, Bridgeways Limited.

This lack of communication has left them in a precarious position, particularly concerning the substantial upfront payments made by some traders to the developers.

Chairman of the Computer Village Market Board, Chief Adebowale Soyebo, expressed dismay at the lack of communication from the authorities regarding the project’s termination.

He explained that neither the government nor the contractors had officially informed them of the decision, leaving traders in the dark about the fate of their investments.

Traders who had made payments to Bridgeways Limited now seek clarity on the refund process. The absence of official communication has compounded their concerns, with many uncertain about the fate of their investments.

While acknowledging the payments made by traders, Lagos State Governor’s Adviser on e-GIS and Urban Development, Dr. Olajide Babatunde, assured that the government would facilitate refunds.

He, however, said there is a need for proper identification and verification to ensure that affected traders receive their refunds accordingly.

The termination of the Katangowa project has reignited debates about the relocation of Computer Village.

Traders assert that the issue of relocation should not be raised until the new site is at least 70% completed, as per their agreement with the government.

The cancellation of the Katangowa project underscores the challenges associated with large-scale urban development projects and the importance of transparent communication between stakeholders to avoid such situations in the future.

As traders await further directives from the government, they remain hopeful for a resolution that safeguards their interests and ensures the continuity of one of Nigeria’s most prominent tech markets.

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Government Begins Disbursement of N200bn Support Fund to Manufacturers and Businesses

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The Ministry of Industry, Trade and Investment has initiated the disbursement of the long-awaited N200 billion Presidential Conditional Grant Scheme.

This is the beginning of a vital phase in the government’s strategy to provide financial assistance to manufacturers and businesses across Nigeria.

The scheme, which is being administered through the Bank of Industry (BOI), has been divided into three categories of funding, totaling N200 billion.

The disbursement process comes after an exhaustive selection process and verification of applicants to ensure transparency and accountability in the allocation of funds.

Doris Aniete, spokesperson for the Ministry of Industry, Trade and Investment, announced the progress in a statement posted on the trade minister’s official X (formerly Twitter) handle.

Aniete highlighted that verified beneficiaries have already started receiving their grants, signaling the beginning of the phased disbursement strategy.

“We are pleased to inform you that the disbursement process for the Presidential Conditional Grant Programme has officially commenced. Some beneficiaries have already received their grants, marking the beginning of our phased disbursement strategy,” stated Aniete.

She further disclosed that by Friday, April 19, a substantial number of verified applicants are set to receive significant disbursements.

However, Aniete emphasized that disbursements are ongoing, and not all applicants will receive their grants immediately, assuring that all verified applicants will eventually receive their grants in subsequent phases.

The initiation of the disbursement process comes after more than eight months since President Bola Tinubu announced the grant for manufacturers and small businesses.

The scheme aims to mitigate the adverse effects of recent economic reforms and foster sustainable economic growth by empowering businesses with financial support.

President Tinubu had outlined the government’s commitment to strengthening the manufacturing sector and creating job opportunities through the disbursement of N200 billion over a specified period.

The funding is intended to provide credit to 75 enterprises, each able to access up to N1 billion at a low-interest rate of 9% per annum.

However, the implementation of the programme has faced challenges, including delays and criticisms regarding the registration process.

Femi Egbesola, President of the Association of Small Business Owners, expressed concerns over the slow pace of data collation and suggested that genuine businesses were being discouraged from accessing the loans.

Despite the hurdles, the commencement of the disbursement process signifies a significant step forward in the government’s efforts to provide vital support to manufacturers and businesses, potentially revitalizing economic activities and driving growth across various sectors.

As beneficiaries begin to receive their grants, the impact of this initiative on the nation’s economic landscape is eagerly anticipated.

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MicroStrategy Rally Crushes Short Sellers, Wiping Out $1.92 Billion

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Short sellers betting against MicroStrategy found themselves facing significant losses as the company’s rally wiped out $1.92 billion since March.

This development comes amidst a rally that has seen MicroStrategy’s stock outperform bitcoin, causing a considerable hit to those who had taken a bearish stance on the tech firm.

According to data from S3 Partners, short sellers have been on the losing end since March, as MicroStrategy’s stock surged, highlighting the impact of the rally on those betting against the company’s success.

This loss underscores the challenges faced by short sellers in a market where certain stocks experience rapid and unexpected price increases.

The rally in MicroStrategy’s stock is attributed to several factors, including the approval of several spot bitcoin exchange-traded funds (ETFs) by the Securities and Exchange Commission (SEC) earlier in the year.

This move by the SEC brought bitcoin, a once-nascent asset class, closer to the mainstream and fueled investor interest in companies like MicroStrategy, known for their significant holdings of the cryptocurrency.

MicroStrategy, which held nearly 190,000 bitcoin on its balance sheet as of the end of 2023, has indicated its intention to continue increasing its exposure to the digital currency.

The company’s decision to sell convertible debt to raise money for additional bitcoin purchases further bolstered investor confidence and contributed to the stock’s rally.

Analysts at BTIG noted that the premium for MicroStrategy’s stock reflects investors’ desire to gain exposure to bitcoin indirectly, especially those who may not have the means to invest directly in the cryptocurrency or ETFs.

The company’s ability to raise capital for bitcoin purchases is seen as a positive sign for shareholders, adding to the optimism surrounding its stock.

However, despite the recent rally and optimism surrounding MicroStrategy, the crypto industry as a whole continues to be heavily shorted.

Short interest in nine of the most-watched companies in the crypto space remains high, standing at 16.73% of the total number of outstanding shares, more than three times the average in the United States.

Moreover, concerns persist regarding the SEC’s stance on cryptocurrencies, with some experts suggesting that the approval of spot bitcoin ETFs may not necessarily indicate a broader acceptance of other similar products, such as spot ethereum ETFs.

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