Our Features Desk probed further into the woes of the textile industry and discovered that among issues like policy inconsistencies, finance are the least of its problems. GBUBEMI GOD’S COVENANT SNR concludes the series.
The critical state of the Textile industry in Nigeria requires a calculated, determined government to recover and restore the once bride and pride of the Nigerian economy. Master plans upon master plans in the hands of government officials without a will to deliver have stymied both intents and letters of government policies periodically flaunted in the face of the ailing industry operators since the last decade.
While the nation watch helplessly at a government that has shown little or no political will in tackling the infrastructural deficit in the country of which power is a national shame, Daily Times investigation revealed that the unbridled importation of substandard and cheap finished textile materials into the country is not without the involvement of associated government agencies.
And characteristic of policy makers who prefer the feel of liquid cash to pursuing structural, remedial recovery processes, the Federal Government hesitated to disburse the N100 billion Cotton, Textile and Garment Revival Fund to already dry and broken industry operatives.
At an encouraging interest rate of six per cent and a repayment period of five years, textile operators who ought to welcome the relief, proved more mature and professional than policy makers who sourced the loan through the Bank of Industry (BoI). Daily Times gathered that rather than scramble for the loan, most textile companies avoided it like plague.
According to the Director General, Nigeria Textile Manufacturers Association (NTMA), Mr. Jaiyeola Olanrewaju, only a negligible number of textile firms have so far accessed the loan. He also disclosed that very few cotton and garment firms have taken the loan, which sought to revitalise the CTG industry along the entire value chain, including textile, cotton, and garment production.
An informed source at the Manufacturers Association of Nigeria (MAN) told our correspondent that the fund introduced in 2010, and currently managed by Bank of Industry (BoI) only helped some of the 20 textile companies that took the loan to refurbish their machines.
“With smuggling unchecked and power problem unresolved, the textile industry is not going to blossom, not for a long time. Then there also are the issues of cotton and other related raw materials. How can you go disbursing loan with all the loopholes that sank the industry unchecked? It doesn’t make sense,” the source said.
Also speaking to our correspondent on the N100 billion loan at his office last week, Director General, Manufacturers Association of Nigeria (MAN), Dr. Jide Olanrewaju, told Daily Times that textile operators who took the loan got their fingers burnt when they discovered, shortly after accessing the loan that over 80 per cent of the market has been taken over by cheap imports from Asian countries.
“The influx of foreign textiles into the country made locally produced textiles less competitive, as they are often costlier than imported or smuggled ones. The result was that other companies yet to access the loan chose to avoid it. Most of them became afraid that they may not be able to repay the loan considering the prevailing unfriendly operating environment, especially the lack of infrastructure.
As far as the textile firms are concerned, Olanrewaju said: “Government put the wrong foot forward when it failed to reduce smuggling and address the more fundamental challenge of lack of infrastructure, especially power supply before coming out with the bailout fund. Because of Nigeria’s huge infrastructure deficit, manufacturers, including textile companies, are forced to rely on generators at huge cost, resulting in rising cost of production which collapsed the industry beside cotton and other raw materials importation.”
It would be recalled that the price of gas was increased by 15 per cent from January 2014, while price of black oil, which is an important input in factory production processes, remains high due to scarcity.
Even if improvement is made in the smuggling and power sectors which have been elusive so far, the MAN boss said the insecurity situation in the country, especially in the North East, made nonsense of the intervention fund, as most textile companies in that part of the country cannot not operate.
Also, the President, National Union of Textile, Garment and Tailoring Workers of Nigeria (NUTGTWN), Comrade Oladele Hunsu, said in a recent interview that the textile industry is stagnated now. “The problem goes beyond money,” he said, and revealed further:
“The Federal Government had banned importation of textiles into the country before introduction of the fund, which was why operators hailed the initiative and also embraced it; but the initiative was frustrated by the same government’s policy inconsistency. The same government pulled the rug off the feet of operators when it again unbanned the importation of textiles, thus opening the floodgate for cheaper textiles from Asia.”
Statistics at the National Union of Textile, Garment and Tailoring Workers of Nigeria (NUTGTWN) show that the performance of the Nigerian textile industry remained at low ebb in the first half of 2014 and the cause is the Influx of smuggled goods, which occupy over 90 percent of the textile market. The report showed that Nigeria ‘imports’ about N300 billion worth of textiles and garments annually, most of which are illegally imported without paying any duties and taxes. The total amount of revenue loss on account of Customs duty and Value Added Tax (VAT) on this volume is estimated at N75 billion. Such rampant evasion of taxes is lost to smuggling when the government is running from pillar to post, seeking for solution.