In this interview, National Chairman, Nigerian Textile Manufacturers Association (NTMA), Ibrahim Igomu, identifies massive smuggling as the major problem confronting the industry.
What is NTMA all about?
Nigerian Textile Manufacturers Association (NTMA) is the umbrella body of all the textile manufacturers in the country. It is an association that is involved in advocacy, industrial relations, research and documentation as well as interaction with multilateral agencies on behalf of the textile industry.
Recently, the Federal Government floated N100 billion intervention fund for the textile industry. What is the current state of the fund?
We are grateful to the Federal Government for the N100 billion textile intervention fund. It has indeed gone a long way in bringing a new lease of life into the activities of the textile industry. It has provided an opportunity for industry players to have an injection of capital to upgrade machineries, modernize and replace obsolete equipment.
The fund has assisted us to address some of the major challenges we are confronted with. As you know, business is a continuous process. The time these funds were made available, we had teething challenges, capital, infrastructure (poor road network, electricity supply) and high cost of fuel oil.
The major challenge that we are facing today is that of smuggling from far Asian countries, faking of existing trademarks and intellectual property infringement.
Some unpatriotic businessmen fake trademarks of textile materials; they imitate them and dump them on unsuspecting consumers.
Our borders have become so porous that market shares of genuine products have been eroded. When you smuggle these things, you don’t pay import duty. You can see that it is a major challenge. These unpatriotic Nigerians together with their collaborators smuggle sub standard textiles into the Nigerian market.
We know that 80 to 90 per cent of consumers with purchasing power are in Nigeria. If you look at the negative effect of the ECOWAS Common External Tariffs (CET), neighbouring countries like Togo, Benin Republic and Ghana are turned into grounds for smuggling into Nigeria. This is an area that we have made representation to the government.
Now that the government has addressed the difficulty in accessing fund with the injection of N100 billion into the textile industry, the issue of smuggling is still staring us in the face. The problem of intellectual property infringement is being addressed.
The aim of the intervention fund is to revamp the sector. When the sector is revamped, the sector can then employ more people. This way, more taxes are generated, which has a multiplier effect on the nation’s economy.
How much is the nation’s textile industry worth?
Taking a look at the glorious days (between 1975 and 1991) of the Nigerian textile industry, we had 125 active textile industries. We were contributing about 45 per cent to the Gross Domestic Product (GDP) of the real sector, generating about $7billion in the non-oil export sector. We were employing close to 450,000 Nigerians. We were the largest employer of labour outside the Federal Government, State and Local Government.
What is the reason behind the decline in the industry?
The decline began when the government signed the World Trade Organisation (WTO) agreement which opened up the borders without adequate protection for local industries to all kinds of imports. This situation continued unabated until the government began to show interest with the return of democracy in 1999.
During President Obasanjo’s tenure, the idea of an Intervention Fund came up. By the time late President Musa Yar’Adua came on board, the issue of the intervention fund had reached an advanced stage. It was during the administration of President Goodluck Jonathan that the dream became a reality as he handed over the administration of the intervention fund to the Bank of Industry (BOI), who managed the fund.
You know that textile has a value chain; it begins from the farmers, cotton growers.
We thank the government for conceiving policies, like the Export Expansion Grant (EEG), which was to encourage export of products such as finished textile materials. However, some of the challenges that we are facing is in the area of Negotiable Duty Credit Certificate (NDCC) that one obtains as a result of that grant is not being recognized as a Cash Income.
Our members are finding it difficult to use it to pay customs duties. We are appealing to government that it should be done in such a way that we can use the certificate for import duties, payment of electricity bills. We can use the certificate to purchase fuel. Sadly, the customs has made it clear that the certificate is not recognized as cash income in their books.
We have made representation to the government in that area. There is need for EEG (Export Expansion Grant) to have the desired impact that the Negotiable Duty Credit Certificate should be as good as cash. The customs should be allowed to recognize it as cash income in their books. These are some of the challenges that players in the textile sector are facing.
Looking at some of the policies put in place by government to drive textile manufacturing, would you say they are adequate enough to change the fortunes of the sector?
I must give credit to the Federal Government; specifically credit must be given to the ministers in charge of Ministry of Trade and Investment and Ministry of Finance. They have come up with vibrant policies which if adequately complemented by the agencies concerned, the nation’s textile industry will have little or no problem, for example, the intervention of the N100 billion was meant to address capital inadequacy.
Banning some categories of printed fabrics was meant to protect the domestic industries. Government policy of zero tolerance for sub-standard products was not only for the citizens of the country but to give credibility to Nigerian made products. The Standard Organisation of Nigeria (SON) must raise up to the occasion to address the issue of sub-standard products in the market, intellectual property infringement, trademark.
The patient department of the Ministry of Trade and Investment should address the issue of intellectual property infringement. For customs, there is the need to seriously secure the borders like is that case with developed economies. There is the need for constant monitoring of major markets so as to checkmate sub standard products.
Concerned agencies should confiscate smuggled textiles which will serve as a deterrent to other people who may wish to venture in such business. Today, every Nigerian is benefiting from the impact of NAFDAC, because it has succeeded in addressing the issue of sub-standard drugs to the barest minimum. In fact countries are coming in to understudy NAFDAC.
The government should de-emphasise the role of customs as a revenue generation agency. All over the world, customs are not solely to generate revenue but trade facilitation. When an economy grows in term of volume of economic activities, economic institutions are not growing in the same way.
Nigerians have preference for American cars or cars built according to American specifications. Why this is so is because the American Regulatory Agencies are critically doing their work. For a car to be used in America it must meet certain levels of standards; it must have basic safety features. This is what we are telling the government to do as it concerns the textile industry.
If textiles manufactured in Nigeria have high quality, the potentials are enormous but at the moment, trademarks are not protected. This gives room for copying and sub-standard manufacturing of such goods. At the end of the day, the aim of the N100 billion intervention fund is defeated.