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Dearth of
infrastructure to aid manufacturing processes has been identified as
the major challenge facing the anticipated revival of the textile
industry.
Jubril Matins-Kuye,
the new minister of Commerce and Industry, announced during the week
that inadequate infrastructure is one of the reasons the federal
government is planning to suspend the disbursement of the N100 billion
textile bailout promised operators to revive the industry.
The minister
specifically cited Nigeria’s poor power supply situation as well as
trade barriers, which make indigenous textiles uncompetitive in the
markets, local or international.
He argued that some
basic infrastructure, especially power, ought to be in place before the
funds can be disbursed, adding that otherwise, the money will go down
the drain without achieving the purpose for which it was meant.
With regard to
trade barriers, he said, “the country is burdened by numerous trade
obstacles and we promise to ease trade barriers in the country’s
textile industry within the next few months.”
Lack of seriousness
But industry
operators are not happy with the development, saying that this just
goes to demonstrate government’s lack of seriousness with the bailout
plans, initiated in 2007, of which only N10 billion has so far been
disbursed. The N10billion was given to United Textile MIlls Limited
(UNTL) in January.
In view of the
amount so far disbursed and Mr. Matins-Kuye’s excuses for discontinuing
with the bailout, operators argue that government was never serious in
saving the industry in the first place.
Contrary to what
the minister said, textile manufacturers said their major challenge is
the scarcity of fuel oil (low pour fuel oil commonly called black oil)
to power their machines.
In the last three
years, government has constantly made a show over the bailout for the
textile industry, which has suffered serious economic crises, which saw
125 companies closing shops and the loss of over 200,000 jobs, in a
sector which used to be the prime employer of labour.
Criticising this
decision to suspend the bailout, Jaiyeola Olanrewaju, the Director
General of the Nigerian Textile Manufacturers Association, argued that
this will further hamper development and fresh investments in the
sector.
Mr. Olarenwaju said
any change of the goal post in the middle of the game not only confuses
the players but also underscores policy inconsistency in Nigeria.
“If there will be a
change in policy, one will expect the minister to dialogue with the
operators. The association feels that the minister has not been
properly briefed and merely expressed his personal views on the
matter,” he argued.
Sadiq Kassim, an
industrialist and former employee in the sector, noted that with the
anticipated bailout, “most of the textile companies operating in Lagos
are on the gas belt and had started converting the processes to the use
of gas to generate power. So, as far as power is concerned, it should
not be used as an excuse to fail.”
Suspension may be the right step
However, industry
watchers believe the suspension of the bailout might be the right thing
to do, in view of the lack of infrastructure to support substantial
manufacturing activities.
Taiwo Aladelola, an
economist argued, “Giving out funds in the present environment will
only add more stress on the loan utilisation, as most of the funds will
be used to ensure a viable operating condition. This will mean spending
most of the money on production and powering of machines. They
(manufacturers) will at the end of the day realise they can’t produce
nor compete effectively with the imported textiles.”
He also noted that
if government is sincere about finding a lasting solution to the
problem of infrastructure in the country, then it will deploy more
funds to tackle effectively.
Unfavourable operating conditions
For decades, the
texttile industry has been battling with unfavourable operating
conditions, now leaving just a few operatiors still hanging on.
Mr. Aladelola noted
that the removal of trade restrictions will not solve the problems
facing the sector but will lead to a further neglect and decay of the
industry.
“Allowing more
competition is not what is needed for the country right now, as this
was part of what killed the industry in the first place. What is needed
is the development of the manufacturing sector and the economy at large
through finding lasting solutions to the problems of power,
transportation, and funding,” he said.