Home Business Banks loaned Erisco N3 billion from CBN intervention funds – Sources

Banks loaned Erisco N3 billion from CBN intervention funds – Sources

by Business News Report

Indication emerged weekend that contrary to claims made by the Chairman, ERISCO Foods Ltd., Chief Eric Umeofia, alleging lack of support by some institutions, the company has so far been funded to the of N2billion from the intervention fund of the Central Bank of Nigeria (CBN) by several banks Sources at one of the Participating Financial Institutions (PFIs), through which the CBN disbursed the funds to ERISCO and other beneficiaries, disclosed that the company, between June 2014 and April 2016, got various sums for the importation and installation of tomato processing lines and the stockpiling of raw materials for operational efficiency.
But the tomato paste producer, Erisco Foods Limited, which claims to employ 2,052 people, last week threatened to shut down its factory, for lack of support from some government agencies. The company also gave the federal government a 30-day ultimatum to support indigenous manufacturers or else it would relocate its business outside Nigeria. The Chief executive officer, Erisco Foods Limited, Mr. Eric Odinaka Umeofia, said his company has been frustrated by the National Agency for Food and Drug Administration and Control (NAFDAC), Ministry of Trade and Investment and the Central Bank of Nigeria (CBN)
Umeofia said: “Erisco Foods Limited has demonstrated enough patriotism and loyalty towards our dear country and we have risked enough of our investments and life. We will be forced against our patriotic wish to relocate our operations to a country where there is conducive and favourable environment for manufacturing if within 30 days from now nothing significant is done by the government to address these issues raised by us and give us our right to help Nigerians as we can never beg for our right to help our people and economy.”
Banking official who pleaded anonymity, said “ERISCO apart from the N2 billion it it got from several Nigerian banks the company has received additional sum of N1 billion earlier in 2016 to finance the procurement of processing machinery for fresh tomatoes into concentrate”.
The source said “loans received by ERISCO were expected to be repaid within a period ranging from two and a half years to seven years, wondering why the industrialist opted to accuse various government agencies when indeed his company had benefitted immensely from interventions of government and funding from the banks.

Banking industry sources also said that “ERISCO’s challenges might have stemmed from estranged financial relationships with its bankers due to debt service obligations.” Speaking further, the source “alleged that the company might not have kept to existing rules of engagement by importing tomato paste and repackaging the item instead of boosting local tomato paste production in line with the aspirations of the federal government.”
“It is ironical that ERISCO company, which also imports tomato paste to repackage, is now blaming others for its inability to sell its stock of tomato paste and alleging conspiracy by government agencies against indigenous manufacturers,” the source said.
The top banking source alleged that Mr. Umeofia at a time wanted the CBN to allocate foreign exchange directly to his company but that the CBN declined the request stating that the apex bank does not allocate foreign exchange directly to companies. It was also gathered that some of the funds the company has received so far are not being serviced, but that the chief executive of the company wants to use his close relationship with top government functionaries in the present administration to intimidate banks and collect funds without proper documentation.
When contacted, the Acting Director, Corporate Communications Department at the Central Bank of Nigeria (CBN), Isaac Okorafor, who is currently in Washington DC, for the Annual meetings of the IMF/World Bank, declined comments on the allegations made by Umeofia. He, however, said the CBN does not allocate foreign exchange to anyone.
According to him, “By practice, we do not join issues with individuals on matters of this nature. All I can tell you is that the CBN does not allocate foreign exchange. All business persons, manufacturers, traders, etc are expected to approach their respective banks to bid for and obtain foreign exchange. Whether they succeed or not is their business.”
Continuing, he noted that “no amount of blackmail through paid advertorial or sponsored reports could make the CBN change its policy.”
He further disclosed that there were many companies, as advertised by different Deposit Money Banks (DMBs), which made bids for and bought FOREX for their businesses.
Okorafor therefore urged those seeking to purchase foreign exchange to follow the due process instead of deploying blackmail and other unethical schemes in their ploy to win public empathy.
Umeofia however had said: “Everything about manufacturing is being stampeded to die and as much as I have endured for the sake of the love I have for my country, I would be forced to join the importers I have campaigned against.”
He added: “It is difficult accessing the various CBN’s intervention loans for manufacturers and farmers. For instance, the on-going expansion of our Katsina Project has been stalled principally due to lack of adequate government’s support for indigenous manufacturers and lack of market for made –in – Nigeria goods as well as access to funds. This project would have created 50,000 direct jobs within two years and more than 500,000 indirect jobs during the same period.”
“There is an excessively high interest rates that discourages and balloons our cost thereby making the prices of our products high due to high cost of production and this is in addition that we currently generate our own power and it is it obvious difficulty by indigenous manufacturers in accessing FOREX after CBN promised manufacturers that they will be allocated 60% of their FOREX.
“It is unbelievable that for over two months, no FOREX has been allocated to Erisco Foods Limited where as the same FOREX are allocated daily for the importation of finished goods that disfigured Nigeria

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