Business News of Tuesday, 19 September 2017
The Finance and Administrative Manager of Akosombo Textiles Limited (ATL), Justice Boateng, has come out to say that the annual consumption of textiles in the country is about 130 million yards, yet the three largest local manufacturers-ATL, GTP and Printex only produces 30 million yards; explaining why the remaining 100 million-yard deficit is being filled by cheap, counterfeit, pirated and smuggled Asian products.
This startling revelation was made when the Parliamentary Select Committee on Trade and Industry visited the Akosombo factory recently and the true state of affairs were laid bare.
Like Mr.Boateng outlined, the local industry faces high-interest rates, high electricity tariffs, fluctuating exchange rates, smuggling, piracy and counterfeiting which renders them less competitive than their Asian counterparts who in most instances, receive some assistance from their governments.
The interesting thing about the whole debate is the fact that the textile industry sources a lot of materials locally such as salt, shea butter, and cassava which means the industry has a ripple effect on economic development and job creation in the country and thus, must not be ignored or even allowed to die a natural and premature death.
No doubt, these facts were laid bare to our legislators and they will be minded to enact legislation that will ensure the survival of the textile industry which holds a lot of promise, in terms of job creation and boost the manufacturing sector of the economy.
In the view of Mr. Boateng, if getting alternative sources of funding for the industry proves difficult, there are other measures that government can take to improve their competitiveness such as the reduction of electricity tariffs, and other related tariffs.
The local industry is not against competition per se, and asking for an outright ban. What is seeks is a conducive environment to operate competitively, and this should not be too much to ask.
As for counterfeiting, we believe it is against intellectual property rights as well as the copyright laws, therefore the companies can initiate legal processes to get justice. Copying brands and designs have legal implications and we wonder why after so much evidence of putting local brand names on textiles produced outside our borders, we have not persecuted any offender as a precedence.
We are confident of the assurances given by the Trade and Industry Select Committee of Parliament that it will liaise with the sector Minister to devise means to address the multiple problems faced by the textile industry. We are all anticipating a positive outcome.
Compliance of MFIs to new guidelines will restore confidence… Banking regulator had adopted certain measures to ensure that what happened in the microfinance sector in the recent past does not occur again. The BoG has conceded that its previous regime was not punitive enough and as a consequence, has introduced stiffer sanctions for the sector and is pleased with the level of compliance.
For one, the capital requirement has been revised and grouped into four categories. A Finance Committee of Parliament report on measures put in place by the BoG to improve activities of microfinance companies and check the operations of sham companies has given all MFIs in the country up till the end of April 2018 to comply with the new guidelines.
According to the guidelines, MFIs are to focus on providing financial services to people in the lower income bracket as well as small and medium scale enterprises. Therefore, persons with larger funds or financial requirements need to resort to the traditional banks.
What transpired last year in which a number of microfinance companies were forced to fold up due to poor supervision leading to a number of companies to over-step their limits and begun offering ridiculous loans on questionable terms led a number of them to insolvency.
A lot of depositors lost large sums of money in the process without any hope of retrieval, and this sent a chill of anxiety among many depositors. Panic was visible and this led the BoG to introduce some stiffer sanctions for companies that fail to comply with regulations.
Some depositors are still counting their losses and it is, therefore, relieving that a second look is being looked into to ensure better compliance. If we are to encourage greater financial inclusion from the informal economy, then it is prudent to insulate depositors from the sort of challenges that confronted the microfinance sector by reviewing the rules to ensure compliance.
Therefore, it is welcome that the BoG has asked all players in the microfinance sector to comply with the new regulations by next year. It brings a modicum of relief to potential depositors, knowing that their savings are intact.
When the system is regulated better, confidence will be restored in the microfinance sector and more people will be encouraged to save with these institutions.