Charles Nwaoguji, [email protected]
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 cotton production 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, 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.
But the Federal Government recently took some drastic measures to address one of those issues, with the Central Bank of Nigeria (CBN) announcing an end to textile imports and adding all forms of textile materials to the list of items ineligible for foreign exchange from its official windows . The policy was seen as a watershed step 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 apex bank and the textile industry stakeholders which took place recently, 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.
“With immediate effect 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 ebb when compared to what it was in the 60s when the economy was exporting cotton to other countries. As at that time, Nigeria had about 2 million cotton farmers.
The National President of Nigerian Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Hajiya Saratu Iya Aliyu, 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 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 which contributed over 15 percent of GDP earnings for the manufacturing sector as well as 60 percent of the textile industry of West Africa. At that time also, Nigeria had several companies that 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 has really affected the manufacturing sector, 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 liberalisation policies 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, and in the process 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 employing over 10 million people and contributing about 47 percent of the country’s economic growth. Little wonder it is the world’s largest manufacturer and exporter of garments.
Nigerian government have showed some kind of commitment and determination to revive the industry over the years including the setting up of a Committee on Resuscitation of the Cotton, Textile and Garment Industry, which projected that 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 they 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 unstable power supply among other infrastructural deficits, high cost of production, smuggling, high-interest rate, 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.
According to the Director-General of Kaduna Chamber of Commerce, Industry, Mines and Agriculture (KADCCIMA), Alhaji Usman Saulawa, government should clamp down on smuggling menace which operators believe accounts for 80 per cent of textiles in the 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.