Is there hope for the textile industry?

Textile companies in Nigeria have decried the increase in cost of raw materials, saying it, has affected the level of production.

It may be difficult to believe that the textile industry in Nigeria was once a big employer of labour seeing the current abysmal state of the industry. Since the first modern textile mill in Nigeria, Kaduna Textile Mill was established in 1956, the industry began to experience incremental growth supported by the booming agriculture and appropriate government policies. Years ago, the industry was responsible for more than 60% of all manufacturing jobs in the country. In its heydays, between the 70s and 80s,there were 37 textile firms in the country, operating 716,000 spindles and 17,541 looms. By this time, the industry had been recognised as one of the top three textile industries in Africa. The number of textile firms grew to over 100 at some point. But just like the rain of petrodollar affected virtually all other aspects of our productive life as a nation, the textile industry gradually became an orphan without government’s attention. The industry was further affected by the recession the nation experienced in the 80s, which significantly affected the economy. And since then, the textile industry in Nigeria has been on a downward slope in spite of efforts to rescue it. The number of textile companies in the country shrunk from 124 in 1993 to 33 by 2015 with significant drop in capacity utilisation. Within the same period, over 100, 000 able bodies were recruited into the labour market where they contribute nothing to the economy.

Apart from the petrodollar and the recession that triggered the spiral fall in the industry, many other factors havelingeredas the debilitating blocks to the resuscitation of this all-important industry. Today the industry’s installed capacity is about 1.7 billion metres of fabrics per annum. However, the current capacity utilization is between 25 – 30% of the installed capacity. A noteworthy factor is the huge Nigerian population, which the existing textile companies lack the capacity to service. Resultantly, businessmen import foreign textiles to exploit the shortage in local supply. Over time, these businessmen have mastered the art of penetrating the market at the detriment of local manufacturers. When the government placed a ban on importation of textile materials, it deterred open and blatant importation of textile, but it encouraged smuggling by not instituting adequate checks. In fact many “Made in Nigeria” prints that are in circulation are actually produced abroad and smuggled into the country with the collaboration of those that should prevent the act.And the inconsistency in government policies has left this industry in a very precarious state. Today, the government places a ban on importation of textile materials, then the next day manufacturers would wake up to a differing news headline:“Government lifts ban on importation of textile materials.”

The textile industry is naturally built and developed on a strong collaboration between two important sectors. The industry cannot survive without a functional and innovative agricultural sector. The raw materials that are needed for textile production are sourced from the agricultural sector. Hence, when Nigeria began to move backwards in innovative agriculture, we simply reverse the fortunes of the textile industry. The availability of cotton, for instance, is a major driver of textile manufacturing. Whilst Nigeria has not completely lost out in cotton production, our capacity has reduced significantly, and that has invariably affected the availability of raw materials for the textile industry. In recent times the contribution of cotton to the GDP has plummeted from 25% to 4% and the country is currently missing in a multi-billion dollars export opportunity. In essence, as a result of the degeneration in production of raw materials, textile manufacturers are left with no choice than to import raw materials in addition to the technology that is also imported.

Similarly, the state of infrastructure in the country is debilitative to the development the textile industry and the manufacturing sector at large. What can be more incapacitating than an erratic and unfavourable infrastructure, especially power?The other challenge facing the industry is inadequate manpower development. It has been argued that there is poor partnership between the academic institutions in Nigeria and the manufacturing sector, especially the textile industry. To sustain an industry requires training and re-training of the manpower for such industry. If the Nigerian graduates are not well prepared, it is only natural that the industry will lack innovation and remain backward. Then again, the academic institutions are also faced with the poor funding and the absence of modern technology to properly equip the students. However, funding is a problem across all sectors of the economy. Manufacturers are unable to obtain cheap funds to grow their business. Interest rates in the country are too high and unattractive to business owners and manufacturers.Those who take the risk of borrowing at high interest rates are dazed with inconsistent government policies. In actual fact, bankers are also wary of lending to the textile industry owing to the uncertaintiesthat have characterised the industry.

The many challenges facing the industry require the intervention of the government to change the tide. Textile industry in Nigeria has been a private sector driven industry but growth cannot be guaranteed without the presence of the government. The role of government is simply to provide the enabling environment for private investors to sail smoothly. The government has not been completely absent; however, the inconsistency in policy formulation and pronouncement has been the major challenge. In recent times, there have been concerted efforts aimed at resuscitating the industry. In 2009, the government introduced a 100 billion naira intervention fund. According to the General Secretary of the National Union of Textile Garment and Tailoring Workers of Nigeria, IssaAremu, by 201338 textile firms had benefitted from the N100 billion intervention fund saving the country about 8, 000 jobs. Additionally, a ban was subsequently placed on the importation of textile materials to discourage Nigerians from patronising imported products. Just when the industry was beginning to experience a new lease of life, the government lifted the ban on imported textile materials. The implication of this is that locally made textile products will have to compete with cheaply produced counterparts from China. The primary reason for the government’s decision was that despite the ban on importation, foreign fabrics were still being smuggled into the country, which suggests that the ban was not effective.

However, the government has not relented in efforts to resuscitate the industry. The most recent policy intervention of the government was the launch of the Cotton, Textile and Garment Policy (CTG), which is designed to tackle and solve the myriads of the sector’s problems ranging from poor infrastructure, marketing and the seed issues in the cotton sector, in order to increase the capacity of the sector to compete globally with her counterparts in Asia and other parts of the World.

Some commendable objectives of the CTG are the proposal for the establishment of Industrial Parks where all amenities and infrastructure will be deployed in order to alleviate the infrastructural challenges of the sector especially electricity which is about 30-35% energy expends. The government is also expected to mandate all uniformed ministries and agencies to purchase their wares directly from local textile manufacturers, which is an attempt to address the marketing challenge faced by the sector. The government has also considered the approval of new tariff regime, Duty and Vat free for 2years for those who invest in the sector between 2015 and 2019. Major Textile Manufacturers will be granted a 3year tax holiday to encourage investment in the sector. However, laudable as the policy appears, the Nigerian Textile Manufacturers Association has raised concerns about its implementation.

In spite of these challenges the textile industry in Nigeria remains a veritable avenue for economic diversification and job creation. Nigeria has the capacity to be a leading textile manufacturing country if we institute the right policies. We have done it in the past and we can do it again. It is the consistency of government policy that will, to a great extent, determine the growth of the industry. The continued floundering on policy direction is not encouraging. For instance, lifting the ban on importation of textile materials on the basis of increase in smuggling is an indictment on our border security. What would have been more appropriate is to increase the capacity of customs to locate, identify and impound smuggled goods. We cannot legalise stealing because many get away with stealing in the midst of existing legal constraints. Rather, we are expected to tighten our laws and structures to prevent stealing and dispense appropriate punishment to whoever is caught. It is the same philosophy that should apply in dealing with importation of textile materials. Currently, it is estimated that Nigeria spends over $4 billion on imported textiles and ready-made clothes. We can reverse this trend by implementing the right policies. As many stakeholders have observed, the current CTG policy of the government is commendable and possesses the capacity to revive the industry. But the fear has always been sustained implementation with less political motivation.