Nyanza Textile Industries Limited, locally known as Nytil, faces closure unless the government grants the investors tax holiday to keep the company afloat.
The company’s public relations manager, Mr Caleb Ayinebinji and Ms Dorothy Mpiima (Buyikwe Woman MP) addressed a news conference in Kampala yesterday to highlight what they called a looming crisis.
The company owned by investors under the Picfare Group of companies, is seeking a 25 per cent VAT waiver, equivalent to more than Shs5 billion in order to sustain its operations. They said this should run for five years to avoid what they called “painstaking lobbying’. “If the government decides to cancel the VAT concession in the 2014/15 budget Nytil is going to close and the investors will have no choice but lay off more than 3,000 employees directed employed by the company,” Ms Mpiima said.
Mr Ayinebinji said: “We buy cotton from farmers in Kasese, Arua, Hoima and Masindi but without government help, we will not be able to continue doing this. We are the only sector that can reduce the youth unemployment. Let’s support the local industries by granting them tax waivers to be able to create the jobs.”
Asked whether they are not blackmailing government by threatening to close the factory, Mr Ayinebinji said they have met Ministry of Finance officials, Uganda Revenue Authority officials and Members of Parliament to highlight the concern. He said the press conference was intended to re-echo the looming crisis in the textile industry ahead of the Budget reading on Thursday.
When contacted yesterday, Ministry of Finance spokesperson Jim Mugunga advised Nytil officials to petition the ministry.
He reiterated the government commitment to create jobs and support industrial growth.
The tax waiver to the company was given three years ago and every year, according to MP Mpiima, is extended after lobbying.
“VAT is hindering the operations of the company and we are asking the government to extend the waiver for at least five years to support the development of this industry,” Ms Mpiima said.