Nigeria’s House of Representatives and captains of industry, who converged at the National Assembly on Thursday, expressed grave concerns over the disregard to the executive order issued by the Presidency for the implementation of new gas pricing for the strategic industrial sector, 46 days after the approval.
They expressed the concerns during the public hearing on a ‘bill for an Act to establish the National Cotton, Textile and Garment (CTG) Development Council and standardisation CTG Value Chain, as panacea to achieving CTG self sufficiency in Nigeria’. A second bill was ‘ for an Act to provide for the rapid build up of industrial capacity in Nigeria and promote competitiveness of Nigeria’s manufactured goods and products,’ respectively.
Worried by the development, the House of Representatives and captains of industry urged the Federal Ministry of Petroleum Resources to accelerate the implementation of the Executive Order for re-categorisation of textile companies into the strategic industrial sector, with a view to addressing the problems of gas pricing.
According to the memorandum submitted by Bank of Industry (BoI) at the public hearing, the policy which ought to take effect from 1st October, 2017 has not been implemented.
“The Presidency has approved the categorisation of textiles as strategic industrial sector against the commercial sector, effectively reducing the price of gas from $7 to $3 per scm. The new pricing regime was billed to take effect from October 1, 2017. However, it is yet to be implemented,” the bank noted, though without further explanation on the rationale behind the default.
The bank further observed that “similar intervention is required for companies using Low Pour Fuel Oil (LPFO) being supplied by the NNPC for the running of their boilers which has been irregular. This is necessary to alleviate energy crises affecting some of the textile mills that do not have access to gas pipelines, particularly in the Northern states.”
Government was also urged to “facilitate and fast track the processing and commissioning of the Hydro Power Projects such as the Kano State Independent Power Projects at Challawa and Tiga dams to afford CTG industry operators an alternative energy source.”
Similarly, the bank emphasised the need for “swift implementation of the reviewed Export Expansion Grant (EEG) which would enable utilisation of export credit certificates as instruments for the settlement of debt owed by industry players to agencies such as NEXIM, Bank of Industry, etc., thereby making it more functional and vibrant.”
In his presentation, Hamma Kwajaffa, director-general, Nigerian Textile Manufacturers Association, who reeled out the short term ‘Action Plan’ towards the revival of the CTG industry, spoke of the need for the establishment of a textile revival committee with the clear mandate of creating 25,000 jobs in two years. He also spoke of formulation and enforcement of protective policies to support domestic production growth, availability of sustainable energy to boost investment inflow; technology upgrading fund of seven years repayment and two years moratorium, as well as fiscal policy that will directly be beneficial to domestic SMEs.
On the global scene, he observed that the US market has registered an 8-10% drop in total export, while China’s exports of textiles and garments have been growing at double-digit rates; India, which targets $50 billion exports, achieved $21 billion, while Pakistan’s exports were constrained as exports totaled $10 billion against its target of $22 billion.
In its memorandum, the Bank of Industry (BoI) disclosed that the N100 billion fund set up to revitalise the CTG industry in 2009 and domiciled with BoI, was aimed at restoring the textile industry as the largest employer of labour, after the government.
The bank also urged the House to include the Federal Ministry of Finance or other financing institutions to be members of the Governing Council, since funding is an integral part of the initiative, while Department of Customs and Standards Organisation of Nigeria (SON) should be included in the bid to curtail smuggling and collection of 10% levy on value of imported textiles into the country, as well as standardisation and marketing.
Speaking earlier, Husaini Moriki, chairman, House Committee on Commerce, explained that the CTG bill took into account the historical development of the sector of the country’s economy.
“This bill took into consideration, the factors that facilitated the CTG boom in the 80s and early 90s. What led to the dwindling fortunes of CTG in Nigeria, to the extent that the sector has almost gone into extinction, with less than 10% of our CTG capacity utilisation as at date and close to 95% job loss in the sector.”
According to him, the bill is divided into 16 clauses and it is expected that when eventually it is passed, it would establish a national cotton, textile and garment development council with a governing board. The function of the council will be to promote and facilitate cotton production, standardisation of CTG production and investment in cotton textiles and garment value chain among others.”
The NIRP bill seeks to rekindle the vibrancy in the industrial sector and promote competitiveness in the Nigerian manufactured goods and products in areas of comparative advantage.
The 34 clause bill seeks to accelerate the build-up of industrial capacity in Nigeria; increase manufacturing contribution to Nigeria’s Gross Domestic Product and drive the process of rapid industrialisation based on comparative advantage.
