Only this past June, we had reported that Africa’s richest man, Aliko Dangote is now the world’s 25th richest man worth an estimated $20 billion thanks to a leap in the stock value of his largest holding, Dangote Cement in which he owns a 93% stake. Check out our post on his leap to become the 25th richest man in the world here.
Not one to rest on his laurels, Aliko Dangote has officially ventured into Nigeria’s lucrative tomato paste business by teaming up with the Central Bank of Nigeria to establish a $25 million tomato-paste factory that could boost the income of tomato farmers around the country.
The Central Bank of Nigeria reportedly teamed up with Dangote after an internal study showed that processing local tomatoes is cheaper than importing paste from China. The partnership is part of the country’s drive to cut down annual food imports in the country.
“We want to prove that with the right application of government policy we could get finance to the sector, improve productivity, create jobs and raise income,” said Central Bank of Nigeria Governor, Sanusi Lamido Sanusi.
Global business website, Bloomberg Businessweek interviewed a Nigerian tomato farmer, Shittu Ibrahim recently who ekes out a living for his two wives and 11 children by selling tomatoes he grows to passersby along a highway that runs through the Kadawa Valley near Kano. Ibrahim is hopeful about the news of Dangote’s foray into the tomato paste business saying:
“We are doing this only to feed, as you can see, I can’t afford the luxuries of life,” the stocky 56-year-old said. “There are better prospects in supplying Dangote because people will buy from them from all over the country. We hope that things will improve.
Before, the price of tomatoes would keep going down because all the farmers sell at the same time,” he said. With the coming of the Dangote factory, prices won’t go down that way any more. We can be sure of a stable income,” he continued
Nigeria currently pays more than $360 million annually to import more than 300,000 metric tons annually of tomato paste from companies such as China’s Baoding Sanyuan Food Packing Co.
Dangote’s tomato paste business would be run by Dangote owned Dansa Holdings and reportedly took up the mandate after the government failed to get importers including Olam, Conserveria Africana Ltd. and Chi Group Ltd. to form a venture. According to the CBN, farmers will receive a guaranteed price of about $700 per ton compared to an average of about $350 that they currently receive.
“It’s a win-win situation. We have a price we can compete with and the farmer has a price that makes the tomato a good value,” said Sani Dangote, , Aliko Dangote’s brother who serves as Vice President of Dangote Group. “It’s only agriculture that can take poverty away overnight because it doesn’t take long for the farmer to see the results and reap the rewards.”
The plant will commence operations in November 2013 and will produce more than 400,000 tons of tomato paste annually.