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Textile revival fund: The many hurdles to cross

In fact, the agitation peaked around 2003 when Chief Olusegun Obasanjo was president. Proposals, revival and repayment plans were submitted to government and a N70-billion-loan…

In fact, the agitation peaked around 2003 when Chief Olusegun Obasanjo was president. Proposals, revival and repayment plans were submitted to government and a N70-billion-loan was approved for textile manufacturers and NEXIM Bank was to disburse the funds. Specifically, cheques were duly issued and beneficiaries smiled to the bank, but got the shock of their lives. The cheques bounced and government gave a plausible explanation, arguing that the cheques were merely symbolic and not cashable financial instruments. Clearly, NEXIM Bank and the Federal Government were unable to source funds when Merryl Lynch backed out of the deal. Thereafter, United Bank for Africa (UBA) came to the rescue.

However, the bank charged 10 per cent interest, according to reports, on the N70 billion, and on this point, it disagreed with the Federal Government. Afterwards, textile owners, NEXIM Bank and government officials were at a crossroads while the industry laid prostrate. Significantly, the Obasanjo administration left and his protégé, Alhaji Umaru Yar’adua, inherited the half-baked policy, rewired it and jerked up the fund to N100 billion.

Cotton, Textile and Garment (CTG) development scheme, as the fund was re-christened, went the whole gamut of including cotton producers, textile firms and their finished products in the package. In addition, a presidential committee comprising NNPC, Debt Management Office, Ministry of Foreign Affairs, Bank of Industry, Finance and Power ministries, as well as United Nations Industrial Development Organisation (UNIDO), including cottage and textile unions, was set up. Also, BOI took over from NEXIM Bank and the former was asked to look for ways and means to finance the loan. Specifically, the five-year loan attracts 6%-interest.

Last November, a high powered delegation including BOI’s Managing Director, Minister of Finance and Chief Economic Adviser as well as Minister of State for Commerce and Industry came to Kaduna to inspect the textiles, interact with stakeholders and work out disbursement criteria.

However, in spite of the team, the Manufacturers Association of Nigeria (MAN) was sceptical and Engineer Ibrahim Usman, its Kaduna southeast chairman, belled the cat. Bearded, medium height and brutally frank, Engr Usman asked if the inspection was not another jamboree, but Dr Mansur Muktar, the Finance Minister and Chief Economic Adviser, Tanimu Yakubu, said  it was for real.

In fact, two months after his promise, the disbursement commenced. Last week, BOI reportedly released N10 billion, but instead of receiving plaudits, the disbursement is raising some disquiet in the industry. Particularly, the list of beneficiaries, the criteria for release and who got what amount remain a secret and this mystery, according to Usman, will not augur well for transparency. More so, the industry is also beset with problems of dumping, epileptic power supply and inadequate cotton, the primary raw material.

Fundamentally, the revival plan was flawed from the beginning as government put the cart before the horse, according to experts like Mr Mike Okpere, the Managing Director of Gymser Commodity Limited. Cotton farmers and marketers, he told Weekly Trust, were relegated in the sharing formula, and for this reason, the revival plan will fail.  Textile mills, he revealed, will get 70 per cent of the fund while ginners will receive 20 per cent, leaving a paltry 10% for both marketers and cotton farmers.

Ideally, the availability and quality of cotton ought to be uppermost but the government focused mainly on milling. Thoughtless and wasteful, Okpere likened the bailout to pouring water into a basket as there is no cotton to feed the mills. Right now, the Nigerian mills need about 7,500 metric tonnes of cotton seeds, but little or nothing is on ground to meet this demand. Olam and WACOT have promised 500 metric tonnes, leaving a shortfall of 7,000. The last time Nigeria developed cotton seedlings was in 1971 and 1977, and since then, “we have been using recycled seeds. For this year, there is no seed to plant in Nigeria”, Okpere said.

Apart from cotton seeds, there is the Janus of counterfeiting and smuggling where cheap fabrics, usually from China, are cloned and dumped in Nigerian markets. Usually, unscrupulous local businessmen go to China, collude with factories to produce substandard materials and smuggle them into the country through our porous borders. To curb smuggling, the Nigerian Customs Service will be reorganised, the government had promised.

In addition, power and energy are also central to the revival of textiles, but like smuggling and dumping, the twin problems are beyond textile owners. Most textiles run on a 24-hour basis, and for this reason, they require uninterrupted power supply. If the current situation persists, the textile firms will be forced to invest heavily on power and that portends capital flight as a substantial part of the loan will be used to import generators.

Last year, President Yar’adua acknowledged the link between power and textile revival. “All ongoing projects under the National Integrated Power Project (NIPP),” he promised at MAN’s Annual General Meeting, “will be pursued with greater vigour.” Similarly, contract for a 215-megawatt power plant, according to the Finance Minister, has been awarded to General Electric to cater for industrial areas, and in 18 months, he had promised in November, the project will be completed. As yet, the country’s generation has not improved and the anticipated power projects are yet to come on stream.  

However, some textile owners see a silver lining in the cloud. Alhaji Saidu Dattijo Adhama, the executive chairman of Textiles and Garment Industries in Kano, does not see smuggling as an impediment. “We had operated when there was smuggling. It is not a new thing. Our quality then was able to compete with foreign fabrics”, he said. The menace, according to him, can be curbed “with mass and quality production, which we can do.” Specifically, he praised government for its efforts “for giving us cheap black oil and diesel directly from NNPC”, promising to give textile firms at least 12 hours of power supply as against the current six hours. Even in the face of unavailable cotton seeds, Adhama still praised government to the high heavens.

“I know there is a cotton revival committee. The government will make cotton seeds available. They are doing their best,” he told Weekly Trust. However, not many stakeholders share Ahdama’s optimism and given its myriad problems, it may be difficult for the textile industry, the highest employer of labour after government, to bounce back to the good old days.

Right now, there are only about 24 firms in the country and between 1990 and this year, about 151 textiles have closed shop. Can the promised N100 billion revive them or at least protect the remaining 24 from going under? Time will tell.

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