High interest rates affect Nigerian textile sector

11 Mar '16

2 min read

Nigeria's major textile manufacturers have cited the high cost of financing as a major barricade to the several efforts to move the industry forward, according to Nigerian media reports. Annual interest rates on the loans in Nigeria are close to 30 per cent whereas in China rates of less than 6 per cent are sometimes available.

The federal government had set up a N100 billion textile and garment intervention fund, and disbursed funds at rates of six per cent interest about six years ago. However, the impact of fund was modest since beneficiaries tended to refinance their existing loans and spent very little on capital investments.

The Nigerian textile industry is under performing due to the influx of cheaper fabrics from India and China, as about 30 operational textile mills in Nigeria are running at an average of 40 per cent of installed capacity.

Nigeria spent N24.7 billion ($130 million) on textile imports in Q3 2015, according to National Bureau of Statistics (NBS) data. The country is projected to import textiles worth N27.5 billion (around $140 million) by the end of the year 2016.

Meanwhile, the Bank of Industry has blamed the various state governments' for their failure to efficiently implement the national cotton, textile and garment policy in their respective states for the collapse of textile companies across the country. (NA)

Fibre2fashion News Desk - India

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