Plumes of black smoke billow across blue skies over Moygashel village in Co Tyrone, hours before a loyalist bonfire is lit on Thursday evening.

Teenage boys are burning rubble at lunchtime to clear the bonfire site; towering over them, an effigy of a migrants’ boat, placed on top of the pyre, containing more than a dozen life-size mannequins wearing life jackets.

The structure has sparked outrage since its appearance 24 hours earlier.

Despite calls for its removal – one Protestant church leader branded the effigy racist and threatening – a newly erected Tricolour is placed beside the boat.

“Isn’t it brilliant,” one woman shouts across the street, before ordering her two children to stand in front of the unlit pyre for a photograph.

Red, white and blue bunting lines the main village street where Union Jack and Ulster flags are attached to every lamp-post.

One of the teenagers guarding the bonfire entrance moves to the centre of the road, shaking a bucket at passing motorists for donations.

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On the pavement beside the site, a freshly painted wooden sign is daubed with the words, “PSNI lift at own risk”.

A “massive crowd” will gather at the Moygashel bonfire before it is lit at 10.30pm, according to one resident who marvels at its builders and dismisses condemnation of the effigy.

“Police haven’t removed it so it’s not racist and it’s not a hate crime,” he says (On Thursday night, police said they had received a number of reports about the bonfire material and were “investigating this hate incident”).

Others disagree.

“I was deeply depressed when I saw it. I think it is horrendous,” says former loyalist paramilitary David Adams.

“It’s just racism, pure and simple; I hate to drag religion into it … but it goes against everything that Protestantism is supposed to be about.”

Adams, a former UDA member, helped deliver the loyalist ceasefire of 1994 and was part of the negotiating team in the lead up to the 1998 Belfast Agreement.

He also worked for the charity Goal based in Dún Laoghaire, and travelled to more than 10 countries before his retirement in 2018.

Racism has become a “major problem across the jurisdiction, North and South”, according to Adams, who expressed concerns about the shift within elements of loyalism to the far right.

Earlier this week, a report by a counter-extremism organisation found there was an increasing cross-Border co-operation between anti-immigrant figures in the Republic and loyalist groups in Northern Ireland.

“All those overt symbols of racism, such as Moygashel, are horrifying but we have to consider it has spread far, far deeper than that; there’s all the casual stuff too,” he says.

“It’s a deep concern and we tend to consider it as a far smaller problem than it actually is – but I think it’s getting worse.”

Latest figures show that just 3.5 per cent (65,600 people) of the North’s population are from a minority ethnic group; that compares with 18.3 per cent in England and Wales, and 12.9 per cent in Scotland.

Yet British right-wing political parties such as Reform UK and its leader, Nigel Farage, are appealing to some within loyalism, according to Adams, who believe the “imaginary problems” on immigration.

“There’s plenty of fertile ground out there for the likes of a Farage,” he adds.

“There is an idea in some parts, to make this place as unattractive as possible. It is a tactic, in a broad sense, to thwart reconciliation so that no Irish government would touch it with a barge pole.

“It’s self-defeating in the extreme, I think.”

In Moygashel, the villagers are preparing for the evening ahead on a hot July day. Teenage girls sit on footpaths while a woman in a wheelchair is looking forward to the events over the Twelfth.

“We’ve a Scottish [Orange Order] lodge arriving here tomorrow, they’ll parade here, it’ll be a great week,” says one man.

“There’ll always be people who’ll complain about the Moygashel bonfire … but we love our village. This is all part of our culture.”