Nigeria's Dangote Flour to face hard time after funding cut by S.Africa's owner

Operations of Nigeria's Dangote Flour, majorly owned by South Africa's Tiger Brands may suffer some hic cups amid review of the foreign investor's funding in the loss-making local pasta firm.
Tiger Brands announced on Monday it has cut off funding to its Nigerian unit as the South African consumer goods maker launched a review of its investment in the loss-making pasta and flour maker.

Dangote Flour worker in factory

Already, shares of the local pasta maker fell 4.7 percent on the Nigerian Stoce Exchange (NSE) following the announcement of the funding cut by the parent company.
Minority investors in the company are looking elsewhere to put their money as the future of the pasta firm looking bleak after the what seem a financial suffocation for the company that has consistently recorded loss in the past three years.
Tiger Brands has struggled to make a profit at Dangote Flour Mills (DFM) since paying nearly $200 million for a 65 percent stake in the firm three years ago as part of broader plan to expand elsewhere in Africa to offset slow growth at home.
But DFM is battling tough competition and weakening naira currency, forcing Tiger Brands to twice write down the value of the business by a total of 954 million rand ($66.31 million).
"Tiger Brands has decided not to provide further financial support with respect to its investment in Tiger Branded Consumer Goods plc of Nigeria," the company said in a statement.
Shares in the Johannesburg-based company climbed 4 percent to 323.21 rand by 0942 GMT, outpacing a slightly higher JSE Top-40 index.
One analyst said the move would enhance Tiger Brands' earnings.
"In the longer term, Nigeria will probably be a good place to be if you have scale but Tiger Brands would probably have to refinance Dangote and probably take it a step forward by, for example, going into baking," said Avior Capital Markets' analyst Jiten Bechoo in Cape Town.
Tiger Brands' other businesses in Nigeria, Deli Foods and UAC Foods, will not be affected by the review. Tiger Brands competes with Nestle Nigeria in Africa's biggest economy.