Textile manufacturers to benefit from 3-year tax holiday
In an effort to ease up the business environment, foster the economic diversification policy and also revive the cotton, textile and garment industry, the Federal Government has proposed to grant major textile manufacturing companies a three-year tax holiday starting from this year.
Furthermore, foreign investors in the sector that support knowledge and expertise exchange between Nigeria and developed countries will not be charged income tax, while the VAT and duty tax will no longer be charged on imported materials used in the textile industry.
These proposals are among the fiscal measures that the Federal Ministry of Industry Trade and Investment has proposed to revive the moribund local textile industry. The proposals are contained in a publication of the FMITI called COMPENDIUM, which details the ministry’s reforms spanning the period 2015 to 2019, and covering various sectors of the economy.
This is coming after various reviews of the national cotton, textile and garment policy birthed in January 2015 during discussions between the federal ministry of industry, trade, and investment and stakeholders in the textile industry as stated in the FMITI reforms report.
According to data from the world integrated trade solution, in 2017 Nigeria spent over N100 billion importing textiles from China, Japan and the United States. In late 2018 the Central Bank of Nigeria (CBN) banned textile importers from accessing the import and export window in order to discourage textile importation and foster the revival of the local industry.
Plans have been set in motion to ensure full compliance of the Executive Order 003 regarding patronage of made-in-Nigeria goods.
Report from the Nigeria’s Textile Manufacturers Association (NTMA) shows that 85 percent of the $1.4 billion worth of textiles that flood the country’s market is smuggled, mainly from neighbouring countries.
“We cannot compete with the level of smuggling and counterfeiting going on now. We used to have about 127 textile firms in Nigeria but that has come down to two or three now,” said Grace Adereti, president of (NTMA) said at a Made-in-Nigeria stakeholders’ meeting in Lagos.
Minister of state for industry, trade and investment Aisha Abubakar, in 2016 paid a courtesy visit to textile firms, and was informed that the biggest challenge facing the industry was smuggling. Three years down the road, smuggling remains a consistent problem in the industry.
According to the FMITI’s reforms report, in tackling smuggling activities at the nation’s porous border posts, the federal government is exploring various options such as bilateral agreements between Nigeria and neighbouring countries as well as providing high technological devices and surveillance cameras for detecting and deterring smuggling operations in the country.
Furthermore, cotton farmers will also be encouraged with funding and assets including two hectares of land for rotational farming and soil preservation. Regional cotton skills training facilities will be established for farmers, cotton lint handlers and other workers in a bid to foster capacity development.
Minister of science and technology, Ogbonnaya Onu, said at the manufacturing Expo ceremony that the manufacturing sector should be well utilised as it had the prospect of giving the country economic prosperity.
He added that the problems of the sector must be solved, adding that collaborations between the manufacturing sector, research institutions and government agencies would foster development at a faster pace.
Babatunde Ruwase, president, LCCI, advising the government on wealth creation, said: “It is imperative to minimise the burden of regulation on investors if the private sector must play the desired role of wealth and job creation as prescribed in the Economic Recovery and Growth Plan (ERGP).”