Textile firms tap into bailout package

By Mbongeni Mguni
Staff Writer | Monday March 22, 2010 00:00

 

A committee has been established in the Ministry of Trade and Industry's Industrial Affairs Department to vet an anticipated deluge of applications from an industry among the hardest hit by the recession last year.

Workers estimated in their thousands lost their jobs as many companies in the textile sector went to the wall last year.

Under pressure from cheaper Asian products in export markets and little support from the Southern African Customs Union (SACU) duty credit certificates, the industry's earnings shrank to levels last seen in 2006.

Prior to the recession, textiles were Botswana's chief non-mineral export, raking in P2.7 billion for 2007 before declining to P1.8 billion in 2008 and P1.4 billion last year, according to the Central Statistics Office.

On Friday, textile firms were brushing up their applications with expectations that the special Industrial Affairs Department committee would be swamped this week. Besides setting aside P38 million over two years for the sector, the Ministry of Trade and Industry last week widened scope for the assistance, a move that will increase the number of applications.

Originally, the bailout - which is designed to improve competitiveness and job retention - was targeted mainly at citizen-owned companies and citizen employees through provision of a financial grant to companies that have re-employed citizens, subsidies for these re-employed workers and government guarantees for CEDA loans targeted at working capital and upgrading of machinery and equipment.

The guarantee has now been extended to non-citizen companies who wish to access it through the CEDA Venture Capital Fund. In addition, subsidies on wages will also cover citizen workers who have been retained as a way of helping the company remain afloat.

Confirming the extended benefits, the Executive Director of Botswana Exporters and Manufacturers Association (BEMA), evangelist Loago Raditedu, told The Monitor that applications were expected to begin rolling in this week.

'BEMA is part of the committee set up in the Department of Industrial Affairs,' he said. 'We have not yet received applications, but we are expecting substantial numbers to start coming in this week. We will keep the public updated and also reveal the first company to be awarded,' he said.

Government's rescue package for the textile sector was in response to a plea for assistance made by BEMA last May.