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National President of Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and Chairman, OPSN Hajiya SaratuIiya Aliyu

How Textile industry can be revival back

 

By Charles Nwaoguji

In the 1970s and early 1980s, Nigeria was home to Africa’s largest textile industry, with more than 180 textile mills employing over 450,000 people. The cotton, textile and garment (CTG) subsector of the economy was then the largest employer after the public sector, comprising over 25 percent of the manufacturing workforce. This industry was supported by the production of cotton by some 600,000 local farmers across the country.

Today, the CTG industry is living in the shadow of its former self as virtually all the companies have shut down, terminating thousands of jobs and requiring Nigeria to annually import some $4 billion worth of ready-made clothing and textiles.

The Director General of Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf have identified some constraints dogging Nigeria’s CTG subsector, including insufficient cotton seeds for production, high cost of operations, smuggling and counterfeiting, high influx of cheap textile and garment products into the country, lack of enabling infrastructure, especially a steady power supply, limited access to funds and poor production standards.

Nigeria’s federal government recently took drastic measures to address one of those issues, with the Central Bank of Nigeria (CBN) announcing an end to textile imports. Adding all forms of textile materials to the list of items ineligible for foreign exchange from official windows is seen as a watershed move in efforts to resuscitate the collapsed textile industry.

Godwin Emefiele, CBN governor, said that although the bank will initially support the importation of cotton lint for use in textile factories, importers must begin to source all their cotton needs locally beginning in 2020.

During a meeting between the Central Bank of Nigeria (CBN) and the textile industry stakeholders which took place earlier in the month, the CBN announced that it has placed restrictions on access to forex for importers of textiles and other clothing materials. This is part of the government’s effort towards reviving Nigeria’s textile industry.

“Effective immediately, the CBN hereby place the access to FX for all forms of textile materials on the FX restriction list. Accordingly, all FX dealers in Nigeria are to desist from granting any importer of textile material access to FX in the Nigerian Foreign exchange market,” the Governor of CBN, Godwin Emefiele said.

It looks like another case of putting the cart before the horse , which authorities in Nigeria have been known for, as cotton production has been on a dip in recent times. The production of cotton in Nigeria is dominated by small scale farmers – with farm sizes ranging from 3-5ha. Cotton farming in Nigeria is currently at its lowest, when compared to what it was in the 60s when it was exporting cotton to other countries. As at that time, the country had about 2 million cotton farmers.

The National President  of Nigerian Chambers of Commerce, Industry, Mines and Agriculture ( NACCIMA), Hajiya Saratu Iya Aliyu, said that she recalled when the Kaduna State Chamber of Commerce used to issue an average of 40 “Letters of Origin” to cotton growers who exported their produce. However, due to the unfavourable policies and price fluctuations in the lasssste 1990s, the fortune of the textile industry was drastically affected to the extent that textile mills began to shut down.

In the 60s and 70s  Nigeria witnessed a boom in its textile manufacturing industry with the industry contributing over 15 percent of GDP earnings for the manufacturing sector as well as 60 percent of the textile industry of West Africa. During this period, Nigeria had several companies which included Aba Textiles, First Spinners Limited,  Kaduna Textiles, Kano Textiles, Texlon Nigeria Limited, and United Nigeria Textiles. Unfortunately, the country switched its interest following the discovery of oil.

The government’s reliance on the oil sector really affected the manufacturing sector, most especially the textile industry. During this period, there was a drop in the production of textiles due to a reduction in the number of farmers that produced cotton, the raw materials used in producing clothes. Apart from the neglect of the agricultural sector, the sector was also affected by trade liberalization policies which were adopted after the Structural Adjustment Programme. This led to an influx of imported fabrics. All these, as well as poor electricity, further degenerated the industry thereby forcing most companies to shut down operations, making thousands of workers jobless. Nigeria crippled its textile industry without thinking about how it would help its economy grow bigger than it was.

Currently, China has more than 100,000 textile manufacturers that have employed 10 million people and contribute about 47 percent of the country’s economic growth. Little wonder it is the world’s largest manufacturer and exporter of garments.

The Nigerian government have showed some kind of commitment and determination to revive the industry over the years. In order to achieve this, the government set up a Committee on Resuscitation of the Cotton, Textile and Garment Industry, which projected that an estimate of approximately N1 trillion ($2.76 trillion) would be needed for a complete turn-around of Nigeria’s textile industry. The government is also giving out seedlings to cotton farmers.  Apart from the government, international investors such as Vlisco Group of Netherlands said it will invest $200 million in Nigeria’s textile industry which will, in turn, create 700,000 jobs.

In 2017, China also announced its intention to revive Nigeria’s dying textile industry with a $2 billion investment. The investment was to be executed by the Rui Group which signed a $600 million investment plan with the Kano State government to resuscitate its textile industry.

Despite taking all these steps,  Nigeria is still far from achieving a positive result. This is because Nigeria’s textile industry suffers from a lot of problems which includes an unstable power supply, infrastructural deficit, the high cost of production, smuggling, high-interest rate, the influx of substandard goods and logistics. It is also worthy to note that the world has also gone beyond where Nigeria was years ago with the introduction of New equipment. It would be very difficult to sustain previously shut down factories because they will not be able to compete effectively with other industries in the world.

For Director-General of Kaduna Chamber of Commerce, Industry, Mines and Agriculture  (KADCCIMA), Alhaji Usman Saulawa, said the government should clamp down on smuggling that operators say accounts for 80 per cent of our local market in defiance of a ban and import restrictions re-imposed since 2005. There should be a thorough reform and massive shake-out at the Nigerian Customs Service to rid it of corruption. The Federal Government should rally all stakeholders to revive and prosecute the National Cotton Textile and Garment Enterprise Policy under the Nigerian Industrial Revolution Plan launched in 2015, but has been sabotaged by the lack of interest by the states.

He stated that measures such as intervention funding, including the N100 billion provided by the CBN since 2009, may not fly in an operating environment with inadequate electricity, a forex crisis and lack of lubricating oil. A report found that some beneficiaries of the intervention fund given at nine per cent interest simply diverted it to servicing existing debt obligations instead of acquiring new machinery and inputs. The N51 billion stimulus the government said it set aside in 2017 and a new move to provide lower interest loans in 2018, may not go far unless the crucial issues bordering on the adverse operating environment are addressed.

About Editor Charles

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