The recent controversy over the Cotton, Textile and Garment, CTG, bail out fund has resulted in a fresh commitment by federal government to step up rebound plans with clear indications to embark on the disbursement of the second tranche of the fund to industry operators. The aim is to fast-track the reawakening process and give lease of life to the industry which has been gasping for life for decades.
Although the list of the next set of beneficiaries is yet to be released, all arrangements for the disbursement of the second tranche have been concluded. “Inspectors have already gone for to inspect the factories and letters of offer have already been dispatched to the beneficiaries,” a source told the magazine. The first tranche of N10 billion was disbursed to some operators in December last year by the Bank of Industry, BoI, the fund administrator.
The heated controversy was aroused by the statement made by Jubril Martins-Kuye, minister of commerce and industry, over the need to halt the disbursement of the fund until when there is a marked improvement in infrastructure to engender smooth industrial development. He specifically suggested that government should not be in a hurry to disburse any bail-out funds to textile operators especially in the face of the existing infrastructure crisis which has left the country’s economy in a perpetual state of paralysis.
He had cautioned that if the money was given to textile operators now without having solved the problem of electricity and other necessities, the money would “go down the drain.” Although it was a statement made in good faith and all honesty given the prevailing situation, but it had drawn the ire of textile industry operators who condemned the minister, believing that it was a ploy to scuttle the bail out plans and send wrong signals to investors. It generated heated controversy in the public domain so much that the minister who was newly appointed then almost got a vote of no confidence from manufacturers.
In order to stop the situation for escalating into an industrial dispute which could cast aspersion on the integrity of the Federal Executive Council, which ratified the intervention fund and to dispel the allegations of inconsistency in policy levelled against the federal government, the minister held series of stakeholder meetings with operators where he said he was not against the disbursement of the bail out fund. "I have not said that the fund should not be disbursed, but that certain measures should be put in place for the disbursement to achieve the objective of government. In disbursing the fund, we must make haste slowly and put in place measures that will revive the sector," Martins-Kuye explained.
To placate the raging manufacturers, it was decided that the second batch be disbursed. Although the actual amount was not disclosed, it was gathered that the BoI was “already at the verge of disbursing the fund.” Some of the beneficiaries of the N10 billion disbursed in December 2009 include Supreme Lace Limited, Femro 3 Nigeria Limited, Mabol Industrial Services Limited, Tofa Textiles Limited and United Nigerian Textiles Plc.
The released fund was already working for the textile companies that benefitted from the first tranche as it is being put into good use. While Femro is trying to expand to meet market demand, Supreme Lace is already retooling and installing new m new machinery to have access to latest technology in textile manufacturing to have competitive edge locally and internationally.
With the second batch ready to be disbursed, there should not be any doubt that BoI, the implementing institution would have put measures in place for effective monitoring, but Jayeola Olarewaju, president, Nigerian Textile Manufacturers Association, NTMA, told the magazine that the association is also monitoring the disbursed funds to ensure that they were being used for what they were meant for. He disclosed that circulars has been sent to members of the association. “This went out with questionnaire for us to know mode of application, how much was applied for, how much was approved, challenges of accessing the loan and other vital information for records purposes,” Olarewaju told the magazine.
The N100 billion bail out fund was launched in 2006. The scheme is a set of strategies, policies and programmes geared towards revitalising and developing the Nigerian CTG industry. The aim was to create conducive economic, institutional, policy and regulatory framework and facilitate access to funding for textile companies which have almost been liquidated because of the electricity challenge in the country.
The minister, through decades of experience in economic and industry operations was convinced that if challenges such as lack of electricity, high cost of black oil needed for modern machines and new technology are effectively addressed, the fund would definitely achieve the desired results. "If these operational conditions are satisfied, the fund will definitely be useful to operators. And that is what we should address," he had maintaine maintained.
Leadership of the Nigerian Textile Manufacturers Association, NTMA, and National Union of Textile Garment and Tailoring Workers of Nigeria as well as the employers union however saw it differently as they said the disbursement of the fund should continue while government was finding solution to the infrastructural problems. “Our stand is that both should go hand-in-hand. Government’s effort to reactivate the power sector should be going on while textile operators are retooling and modernising their machinery. There is no quick fix anywhere,” Olarewaju said.
Ismail Bello, senior assistant general secretary, National Union of Textile Garment and Tailoring Workers of Nigeria, was of the opinion that the problem of electricity has always been an issue. “But there is no doubt that this loan which is on single digit interest rate will help operators to some extent. All these things have to be addressed simultaneously. Government should know that as they are also working on electricity and plugging the smuggling routes to mitigate high cost of production and help local operators, manufacturers also need to be working on their machinery,” Bello told the magazine.
With the assurance given at the last stakeholders meeting by the minister that smuggling would be handled, as well as the avowed commitment to reviving the industry, it is believed that all things being equal, with the considerable efforts being made by President Jonathan, within the next two years, the challenges facing the textile and garment industry would have been greatly surmounted. “With what we have seen from the activities of the President, we are hopeful that things will improve considerably,” Ol Olarewaju intoned.
Martins-Kuye: Committed to improving textile industry
Olarewaju: NTMA will monitor disbursed funds
Bello: Electricity has always been an issue
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