Credit crunch did not lead to collapse of textile sector - expert

04 Nov '09

2 min read

According the Governor of the Central Bank of Nigeria, the root cause of the collapse of the textile sector in Nigeria does not lie in non-availability of credit, but because they did not have access to continuous electricity and raw materials became expensive along with which the country threw its doors open to unregulated imports.

Mr Sansui said that contrary to the theory that textile companies were starved of funds, due to which they collapsed, was totally wrong. He said it was the other way round. Banks also brunt of the collapse of the textile sector to which it had lent heavily and in the process some of the banks went under.

The same line was supported, recently, by the President of Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Dr. Simon Okolo, who emphasised that, credit alone was not the only problem faced by the industry when he spoke on the N100bn revival fund proposed by the government.

He said that, even when the money is eventually given for purchase of machinery and equipment, it would take six months before the banks would process all the documents, and another three months to go about processing the clearing of cargoes at the ports.

Other than that, there would be additional costs like port and import duties which had not been budgeted in the revival fund proposal, as a result of which, considering also the interest, it would prove to be difficult to pay back the loans and as an alternative suggested setting up of a trust fund to finance the sector.

Fibre2fashion News Desk - India

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