CSOs want UDB to priorities financing the Textile

PRODUCTION

Civil Society Organizations (CSOs) have advised the Uganda Development Bank(UDB) to give priority to local manufacturers in the textile sector to borrow and produce more clothing for Ugandans.

The move will reduce the quantities of imported second-hand clothes in the country, hence preventing further spread of the virus.

According to health experts, coronavirus can stay longer on surfaces including clothing for a long time, an issue that could increase the spread of the virus.

Uganda, just like other East African countries import second hand or used clothes and shoes from countries like China and the US that are said to have been hit hard by the virus.

And as the pandemic rages on, there is fear that when such clothes are imported, they could further spread the disease that has already shut down many economies.

The call was made by the country director of the Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI), Jane Nalunga.

According to Nalunga, by capitalizing UDB, the government will have made it easier not only for the textile industry but for the entire manufacturing sector to borrow and increase production.

"We strongly believe that financing the textile sector, UDB will promote local industries to create much-needed jobs and increase exports," said Nalunga.

Recently, the president approved a request by the finance minister to borrow $500m to capitalize Bank of Uganda and Uganda Development Bank. 

If approved by parliament, part of the money will go the central bank and another portion to UBD for lending out.

Apart from access to finances from the bank, CSOs want the government to consider giving incentives to local producers of cotton and other local manufacturers.

They also want an increase in taxes on ‘‘ready-made'' clothes imports. Currently, used clothes and shoes pay import duty (35%), Value Added Tax at importation (18%), Withholding Tax (6%), and Infrastructure Levy (1.5%). For ready-made clothes, Import duty is at 25% while other taxes are the same.

"Just as it was done for used clothes, the import duty on ready-made clothes ought to be increased to 35%. This tax revenue could be directed to boosting the clothing, textile, and apparel sector," Nalunga added.