Tuesday, 1 March 2016

INTERVIEW WITH ERISCO FOODS BOSS, CHIEF ERIC UMEOFIA, ON THE EXTENT HIS COMPANY HAS GONE IN TOMATO PROCESSING

Chief Eric Umeofia, President, Erisco Foods Limited

Chief Eric Umeofia is the Founder and President of Erisco Foods Limited that manufactures tomatoes locally. In this interview, he speaks on his company’s success in tomato processing, the need to encourage local industries and exportation, among other things. Sit back and enjoy it.

You seem to support import prohibition as a way of rescuing local industrial firms. What informed your position?
A former finance minister, during a live interview, was then asked if the country should ban some of these good we can produce here, he said no, describing ban as old fashioned. We should encourage manufacturers by giving some incentives through CBN for the economy to grow, insisting that banning is old fashioned. How can you control investors who are ready to use their products to kill Nigeria with substandard goods? In their countries, where they are using six drums for production, they are using one and a half drums without separation in Nigeria.

Through such acts, they can never stop it because of its huge profit. Nigerians prefer cheaper products. Recently, someone told me they went to the market to ask for Nigerian tomato and the response they got was that Nigeria’s tomato is more expensive. So, with that type of mentality, the minister is telling us we cannot ban. While the economy was failing, they were in service and we cannot repair it till now. So, what makes that idea good? I want to say that minister is old model.

What we need to do for the products that we can produce better, is to push sub-standard goods out of the system so that Nigeria would be better. The other day, the former deputy governor of the Central Bank, Tunde Lemo, said every country devalues 25 per cent of their currency every year and that Nigeria must devalue. Yet, when he was the deputy governor, he didn’t encourage devaluation. My question is, if we devalue, would we get more money in our federation purse? This would keep on destroying our economy.

Exchange rate was 60kobo to a dollar when I was young, now it is N197 at the official market. I don’t need to go to Harvard University to know that what they have done in the past has failed. Now this governor says he wants to try the other way around and they would not encourage it. An example is the case of Dubai, where for the past 15 to 20 years, they have not devalued their currency. Most of the Middle East countries do not devalue and yet their currencies are very strong. What is the essence of devaluation? Our problem is to diversify the economy in the right way and that is what Central Bank is trying to do now.

For example, in Sokoto, 600,000 metric tonnes of onions out of one million metric tonnes they produce every year get spoilt. This is due to lack of preservation. The simple solution is controlled humidity and they would be in money. So why should we allow these farmers suffer. Also you can get onion juice, power, and dried onion, all of which are in high demand in Europe and America.

The manufacturing sector seems to be bedeviled by a lot of challenges. What is your assessment of the sector’s performance?
I think we need to go beyond paper certificate if we will improve manufacturing. Here in Nigeria, someone would claim to be an expert in a field he has never practiced. You cannot call yourself an expert without practicing.

There are a lot of things that are happening in this country that keep amazing me and surprising me, and till now, nobody knows our problems in the manufacturing sector. Why is it not growing? This is because we are not concerned on how we are going to grow this economy by ourselves. We leave manufacturing to foreigners who keep exploiting us and taking our money away. When you watch interviews on the television, every time they call on an expert, I question what they have achieved to be called an expert. A professor or a doctorate degree holder who has only learnt the theory cannot be called an expert without actually practicing. Why can’t they dabble into their theories? Let them take part of their money to start a pure water factory and see how successful they will be.

You cannot buy experience with any form of certificate. Experience is practical. Anywhere in the world, if you watch the economies that are growing, what they do is they try you based on what you have practiced and if you are good, they take you. Here, if people with experience want to go to the television to speak, they tell you to pay. Then they go and invite a so-called expert and then pay them to talk on what they have never practiced.
The initial plan from day one of many foreigners is to protect their interest in the Nigerian economy. They don’t have plans to develop Nigeria to be self-sufficient. In other words, they won’t allow any undue competition. But on paper, they say they are protecting Nigerian manufacturers. Personally, what I have experienced through many association and bodies has shown me that the place is being run to protect foreigners.

For instance, our civil servants are not well trained to discern intentions. So, anyone who comes to show them documents on theory is readily accommodated. We have a huge economy and if it is developed, unemployment would not exist. In every aspect, agriculture, food packaging, construction, among others are key drivers of the economy. Thank God for President Buhari for doing the right thing.

There are so many stakeholders in the tomato value chain and regulators, to a large extent, determine the tide of events. How can government make the environment attractive for businesses to thrive?
So far, only CBN has showed interest in supporting this government as far as I am concerned. The ministry of Trade and Industry, I believe, has been traded away before the minister came because they have been in support of purely foreign goods. The Ministry of Health through NAFDAC is also culpable. If not, why would they know there are harmful products in the market yet not doing anything; there is something more to it. They would tell you that importers are investors. We are talking about low foreign exchange and yet, some still continue to support importing into this country. I commend the CBN because his support has made us think further. We now have the machinery to produce concentrate from Nigerian tomato. With this, we may produce at a higher cost but it is more nutritious for Nigeria. The concentrate we buy usually arrive after 90 to 120 days but with this milestone on local processing, imagine its impact on the economy.

The Minister of Industry, Trade and Investment should not encourage importation of goods that we can produce better in Nigeria. Look at what happened with rice when government reviewed import quota. The investors imported so much rice into the country because they are more concerned about doing business not farming. I call on the minister urgently to make sure this country is repositioned for industrial growth and he should support indigenous and few genuine foreign investors that want to help this economy to grow.

The minister should not allow Nigeria to be traded away under the guise of various trade treaties. I also call on the Minister of Labour and Productivity to look into more than three million foreign illegal workers who are still working here while we are complaining of unemployment. If America, Britain and other countries are deporting Nigerians, why can’t we tell these to go? We need only people with technology, engineers and other technical capacities. Most of these foreign companies bring their citizens to fill all positions including marketing.

What prompted your value addition drive in tomato processing sub-sector?
The central bank’s policy encourages us to look inwards to help the nation. I heeded to this call. The last government encouraged importation but this government now tells us not to import and to make sure we help Nigeria grow. Although in the past I had refused to join them to import which is one of my greatest achievements. They made us think inwards and we then called our indigenous engineers to explain our plans; they came up with drawings to make this work. Although it is two and a half times more than if we import. Concentrate in China processes at $1250 per tonne; they then sell to Nigeria at $850 per tonne through subsidy from their government. So, our government needs to support our industry to ban importation. You can imagine how that cripples us. With this policy, out of nine indigenous manufacturers, there are only three left. If not for this administration’s encouragement we would have shut down our operations.

God has helped us, we just finished test-running with fresh tomato. We buy from Lagos, Kano, Sokoto markets to process all because we love this country. We have designed a machine. When everyone said it was not possible we designed the machine with our engineers and imported it with air cargo here to install. We didn’t get foreign exchange from CBN. We do not get special treatment from the Central bank. I support them because they are doing what is right for Nigeria. I am the biggest tomato manufacturer so I suffer too.

We are now producing with fresh tomato. In other words, those lies coming from the importers saying Nigerian tomato is not enough is false. This year, we would reduce the waste arising from little or no processing of fresh tomatoes by 30 per cent. We would use what we have now to meet up what we are doing and before our plant in Sokoto is completed, we would be saving this nation the shame of importation by producing and harvesting twice a year from our earlier position.

Recently, the Sokoto state governor was here and we did promise that we would build another factory there. Our plans are on track and that factory would be three to four times the size of our Lagos factory. Our Sokoto factory will relieve farmers in Sokoto as our plant in the state would be of great impact in reducing wastage of their unsold commodities.

With the plant being set up in Sokoto, What are your projections for 2016 and how many metric tonnes are you targeting?
We are targeting one million metric tonnes by the end of this year. We are on 450,000 metric tonnes now and by the end of this year our target of one million metric tonnes would have been realised. We are projecting a 10 to 20 per cent growth and with that, we would in no time start exporting to neighbouring countries.

Talking about the export market, one of the major strategies manufacturers are trying to use to hedge against forex issues is to have subsidiaries in export markets that are dollarized and use the earnings from such economies to buffer some of their forex needs. Are you also toeing that line?
I am toeing that line and when we start exporting semi-processed onions overseas, our forex earnings will improve. We are trying to open up our market to where they have high demand and we want to put a plan that would give us all the standards they require. That is a good idea which would help the economy grow. The best option is to be exporting not only importing; that is why we are building a plant to surpass our domestic need in Nigeria.

Do you think inaccessibility to forex would increase job losses in the sub-sector?
That claim is laughable. They are unlucky because of people like me who actively participate in this sector. Practically, there would be no job loss because most of the vacant positions are filled by foreigners, while the jobs given to Nigerians are the menial jobs where they receive peanuts. They are doing illegal jobs and we should not allow them. I offer to take anyone in the tomato industry whose job would be affected because we would be hiring more workers. We are going to employ a minimum of 9000 workers in Sokoto in the next three years.

These people are looking for sympathy and if they truly have the country’s interest, why are they not investing in backward integration. I learnt that the foreign imported brands are more than 100 in the market and everyday more are being smuggled into the country. They have pleaded with me to join them, I refused.

To what extent has poor access to forex affected your company’s operations?
The effect is not as big as not allowing me sell. Until now, new brands of tomato are still coming in to the country. Most of them are fake and NAFDAC would tell you they are being smuggled through unknown routes. It is a lie. They are being brought through official routes and through the ports. The NAFDAC officials have been compromised and they turn the other way. When the forex policy commenced, people were afraid. So the scarcity made our tomato move more in the market. We were then doing 25 per cent of our storage capacity. Now we are doing less than 20 per cent of our storage capacity and we don’t see the market to sell. Yet we have better quality. Yes, our price is a bit higher because good things come with good money. They continue to dump substandard products here to kill Nigerians. The effect of forex is a minor thing to us. With our new machine and discovery, we don’t need forex except for materials to wash our machines or for spare parts. After three years, the export quantity we are going to make would be used to meet up our forex need.

Are you saying that high-level importation has been assailing local manufacturers’ production profile?
Yes, that and also the level of corruption in the system.

In terms of concentrate needs, how is the demand-supply gap being addressed?
We can only cater to our needs now. But by the time the Sokoto plants come up, we can supply others. Once the smuggling stops, Dangote and my company can meet the needs of everyone and once they start producing in Nigeria and employing people, they would have more money to expand their own factories, including me. Everybody grows together. But right now we are yet to see the impact of the Ministry of Industry, Trade and Investments. (Guardian)