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Easy funds likely for Nigerian companies

The Nigerian textile industry is under performing due to the influx of cheaper fabrics from China and India.

There are about 30 textile mills running in the country but only at an average of 40 per cent of installed capacity. In order to encourage domestic production, a ban was imposed on textile imports in 2010. However, this led to increased smuggling. It’s estimated that smuggled imported textiles account for over 85 per cent of fabrics sold locally. Nigeria spent some $130 million on textile imports in the third quarter of 2015.

For most manufacturers the high cost of financing is a major roadblock. Annual interest rates on their loans are close to 30 per cent whereas in China rates of less than six per cent are sometimes available. About six years ago a textile and garment intervention fund was set up. However the impact of the fund was modest since beneficiaries tended to refinance their existing loans and spend very little on capital investments.

Policies geared towards boosting textile and garment industries are being developed in Nigeria. An intervention fund will be established that will offer loans at a single digit interest rate.

 
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