Monday, 9 November 2009
Doubt Over New Textile Policy
Government's stance of injecting over N100 billion into the dying textile industry is raising some misgivings among stakeholders
By Raphael Nkwocha
Former textile worker, Mr. Akintunde Olayinka with the defunct Arewa Textile Company in Kaduna, located along the Kaduna-Abuja road which has been put for sale believes that most statements from the government are nothing but political, and are never implemented. Olayinka was reacting to the statement made by the minister of commerce and industry, Chief Achike Udenwa that government is giving N100 billion comprehensive lifeline to the textile industry. The minister had revealed that the proposal which was submitted to the government has received government backing and will soon be implemented.
Newsworld gathered that the quest to arrest the collapse of the nation's textile industry from under the weight of the hostile business environment in the country was conceived by the former administration of Olusegun Obasanjo. N70 billion was first budgeted as intervention fund which did not see the light of the day. However, some intricacies attached to the pooling of the fund did not allow it to take off. The latest fund the minister said, is to enable Nigerian textile companies invest in critical areas of need in order to strengthen the sector against foreign competition.
The fund was initially planned to be sourced through the Eurobond, a European multilateral organisation with facilities for enterprise development in the developing world. But somehow, the federal government failed to meet the conditions as stipulated by Eurobond and this resulted in the failure to make the loan accessible to the sector.
Meanwhile the country's textile sector has completely collapsed. Stating the fate of the sector, the general secretary of the National Union of Textile, Garments and Tailoring Workers of Nigeria, Comrade Issa Aremu told Newsworld that 38 textile firms have so far closed shop and 15 others operate skeletal businesses, while only three are still in business. The biggest hit came last year when the textile largest mill on the continent of Africa, United Nigeria Textile Company collapsed, causing over 5000 direct job losses and over 30,000 indirect ones including those of suppliers, traders and cotton growers.
Comrade Issa Aremu revealed that so many factors have aided in crippling the textile firms. Amongst them are perennial power supply failure, dearth of expansion fund, payment of multiple taxes, prohibitive interest rates, high cost of imported raw materials and a stiff competition from the booming second hand clothing business. Newsworld gathered that before the Obasanjo government decided to offer a lifeline to the sector, all the major indices of production in the sector had nose-dived. For example, the sector, which had an official workforce of about 253,000 people in 1992, had less than 60,000 in 2006. The minister, Achike Udenwa, disclosed that the N70 billion intervention fund for the textile sector proposed by the last administration was not realised before its terminal date, but that the present administration is proposing a N100 billion to save the industry and it will be sourced from the Bank of Industry and the World Banks and also that it will be implemented according to the World Bank conditions.
The scheme known as the cotton and government scheme is geared towards the revival of the comatose textile industry. According to the minister of state for commerce and industry, Mr. Humphrey Abba at the international conference on Nigeria's textile industry , the fund is only accessible by credible organisations and it will be on a single digit interest rate for the borrowers, but Mr. Felix Adeduwo stated that if only government will implement the revitalisation scheme, it will increase the industry's earnings by N300 billion. He also stated that the sector can be revived in two years from now and within five years, will generate a minimum of 10million direct and indirect employment opportunities not only in Nigeria but also, to all other parts of the world. Comrade Aremu revealed that the N100 billion scheme can only be realistic if the government matches its words with action and it should also improve on the factors militating against its smooth running like interrupted power supply, reduction in multiple taxes and enforcement of government ban on second hand clothes. He also revealed that the government should first put its house in order as most of the importers of textile materials into the country are highly placed government officials.