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Textile Industry Under Threat From polyester Scarcity, Others

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Textile - Investors King
  • Textile Industry Under Threat From polyester Scarcity, Others

The current scarcity of polyester is threatening the survival of textile industry in Nigeria, investigation has revealed.

Polyester fibre is used as cushioning and insulating material in pillows, comforters and upholstery padding. It has high tenacity and durability and can withstand strong and repetitive movements.

But the material, according to operators, is scarce because local production is not sufficient to meet its demand.

Operators are also said to be having challenges accessing foreign exchange, making it difficult for them to procure essential raw materials.

Even though the Federal Government recently reduced the import duty on some of the raw materials and chemicals for the sector, operators said that it was not a consolation as it did not solve the challenge of access to forex.

The Director-General, Nigerian Textile Manufacturers Association, Mr. Hamma Kwajaffa, told our correspondent that the polyester, a synthetic fibre derived from coal, air, water, and petroleum, was not produced in enough quantity to satisfy the demand of the users.

According to him, Eleme petrochemical plant, that produces polyester locally, does not produce enough and that the scarcity is exacerbating the crisis in the sector as more manufacturers have suspended production, sacked workers and turned to other sources of income.

“Most of the Okada riders you see today used to be textile manufacturers,” Kwajaffa said.

The situation, according to the operators, has overshadowed the various efforts taken by the government to revive the sector, such as the Central Bank of Nigeria’s N50bn Textile Intervention Fund and the slash in the import duty of some of the raw materials for the sector.

According to Kwajaffa, the major challenge faced by manufacturers in the sector is access to forex, insisting that there is little collaboration between the apex bank and commercial banks in the area of making forex available to customers.

He said, “To access foreign exchange, we have to go through our banks. They keep telling us that they do not have foreign exchange to give. The situation has impeded our production activities because most of our production components cannot be sourced locally.

“Some of the manufacturers have already stopped production, and it is becoming difficult to convince others not to suspend production.”

He also said, “Easy availability of foreign exchange will allow textile manufacturers to procure raw materials, and thus help in enhancing production, resulting in job creation and increased contribution to Nigeria’s Gross Domestic Product.”

On the N50bn CBN intervention fund, Kwajaffa said most of the operators could not access the loan, adding that out of about 50 people that had applied for it, only 15 people were given.

He called for the release of the textile development levy to the operators, recalling that 10 per cent levy on imported fabrics was established by the government in 1997 to revitalise the textile industry.

He noted that if the funds were established as a special trust fund, it would enable more practitioners, who could not access the N50bn CBN intervention fund, to benefit from it.

Kwajaffa remarked that out of over 84 textile firms that existed in the country in the 80s, only about 24 were left, some of which were managing to stay afloat.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

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Guinness - Investors King

Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

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Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

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Private employers

As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

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Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

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Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

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