Nigerian Textile,Garment and Tailoring Employers Association (NATGTEA)

Textile Manufacturers Hinge Industry’s Revival On New Policy

GMT 06:05 2015 Monday ,13 April

Sriyadithatextile - Textile Manufacturers Hinge Industry’s Revival On New Policy

Nigerian Textile,Garment and Tailoring Employers Association (NATGTEA)
courtesy google

TEXTILE manufacturers have called on President -elect, Major General Mohammadu Buhari to implement the recently formulated policy road map for the development of the sub sector of the economy, saying it would help in reducing the influx of foreign textile products into the Nigerian market.

The Director General of the Nigerian Textile, Garment and Tailoring Employers Association (NATGTEA), Jaiyeola Olarewaju told The Guardian in his Ikeja office Thursday that a committee put in place by the government to implement the three months old policy could not perform because of fund paucity.

He therefore called on the president-elect to ensure the implementation so as to revive the ailing sector. According to Olarewaju, the policy was the measure needed to reposition the Nigerian Cotton, Textile and Garment industry, adding that the new policy document was a product of extensive consultation among stakeholders, the international investor community, the economic management implementation team, relevant ministries, department and agencies.

The new policy which came into being in January, 2015, made it mandatory for the development of integrated textiles and Garment Parks (ITGPS) near raw materials, markets, and requisite infrastructure.

“As done in other countries with thriving textiles sector, as a part of the Nigerian cotton, textiles and Garment (CTG) measures, integrated Textiles and Garment Parks (ITGPS) will be developed with nearness to raw materials, nearness to market, availability of requisite infrastructure and geo-political spread as criteria for determining the locations of these parks.”

The parks, according to the policy, will be fully private sector driven initiative or on a Private Public Practice (PPP) basis. While some of the parks are expected, under the policy to be dedicated to exports and will be located within existing special economic zones, others will be entirely new initiatives.

The ITCIPs are expected to provide the industry with world- class facilities needed for setting up competitive textile units. The different cluster of ITGP world host between 30 and 40 textile and garment plants in a way that all of them would have common user facilities including roads, drainage, water supply, grid connection, capture power supply, common warehouse and factory building.

The new policy on textile, garment and cotton also made provision for the supply of power to the industrial parks to be created in the country.

Specifically, it said they would have captive power and coal power production since power constitutes more than 30 per cent of manufacturing cost in the sector.

“Between 30 and 35 per cent of Textile and garment manufacturing cost are energy related expenses, therefore, without addressing the industry’s energy needs, the sector simply cannot develop, the policy said, even as Olarewaju added that most of the manufacturers have been generating their own power, thus pushing up their production cost.

“Most Nigerian Textile plant self generate 80 per cent of the Power they use. Although textile plants in the southern Nigeria have access to natural gas, the energy cost to them is still high when compared to textile mils in Ethiopia, Egypt and Uganda.

The textile plants in the Northern area are using diesel or Low Power Fuel Oil (LPFO). Plans to extend gas supply network from Ajaokuta to Abuja, Kaduna, Kano will eventually deliver gas to the Northern part of the country.

The Federal Government Intervention is needed to address the immediate energy need of the industry, he said. The new policy, if implemented, would ensure the collaboration between the relevant government departments and ministries, to ensure capture power and coal power production at each of the zones.

Besides, the policy recommended the direct procurement of natural gas, by textile companies, from the Nigeria National Petroleum Corporation (NNPC) at the same cost applied to power generating companies for a period of three years, beginning from the policy implementation date.

The policy also called for collaboration between the Federal Ministries of Agriculture, Trade and Investment to ensure that the textile and Garment Manufacturers get imputes from local sources in order to reduce their cost.

“The Nigeira CTG sector has also been designed to secure imputes mostly from local soruces, which requires strong collaboration between the Federal Ministry of Industry, Trade and Investment (MITI), the Federal Ministry of Agriculture and Rural Development.

The later should be commended for specific initiatives in cotton production, including the development of supply of BT cotton, supply of certified quality seed to cotton farmers at subsidized rate and the on-going supply of jute bag for cotton harvest in order to reduce contamination.”

The policy therefore recommended the establishment of cotton buying centres in areas where cotton are being manufactured, as applicable in developed countries, “where a body is responsible for the development of cotton markets, being buyer of last resort and setting a guaranteed minimum price.”

According to the policy document made available to The Guardian in Lagos Thursday, the government recognized the “extremely week condition of the Nigerian Textile sector,” hence it observed the need to give it a significant and fiscal reprieve to encourage investors.

Therefore, the policy recommended a new tariff regime, already approved by the present administration, which placed a tariff of between 20 and 35 per cent, and between 10 and 15 per cent other levy on imported Textile products respectively.

This, it said, will discourage importation of the products to reduce the influx of foreign and inferior products into the Nigerian Textile market. Other fiscal measures, recommended in the policy, to protect local textile firms, included the removal of tax on equipment and imputes for a period of four years, beginning from 2015, and application of industry wide Tax holiday for a period of three years.

‘‘All investors who invest on the sector from 2015-2019 will be able to import imputes used in Textile manufacturing (plant and machinery, spare parts, dyes, chemical and packaging material shall be duty and VAT free for a 4 years period and to service the industry, all major textile manufacturers in Nigeria should benefit from a 3 year tax holiday (2015-2017).

The new policy also granted textile manufacturers some relief and incentives aimed at developing the sub-sector. It said any manufacturer or investor that invest a minimum of $10 million in Nigerian cotton, Textile and Garment, and employ a minimum of 500 direct Nigerian Staff from their Nigerian manufacturing operations would be given offer to import 50 per cent of their imputes levy free for five years.

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