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Revamping the textile industry in Nigeria

Nigeria’s textile industry, once acknowledged as the hub of textile industries in the West African sub region, is at its lowest ebb. But industry watchers believe strongly that one of the practical ways to breathe life into the comatose industry is to immediately checkmate influx of smuggle goods.  UFOMBA UZUEGBU, Assistant News Editor, reportsApparently, efforts by the present administration led by President Muhammadu Buhari to revitalise the nation’s moribund textile industry is yet to yield result one year after he assumed office. Sadly, not much has been heard about the activities of the Cotton, Textile and Garment (CTG) Committee set up by President Buhari to look into the problems of the sub-sector and advise the government on how to revamp it and make it contribute positively to the country’s Gross Domestic Product (GDP), including job creation. It would be recalled that the ruling All Progressive Congress (APC) party, had during its electioneering campaign promised to create 720,000 jobs per annum if elected into office.
However, it is on record that Nigeria’s textile industry, in times past, occupied a very pre-eminent position in the nation’s industrialization efforts. The 1980s represented what could be term as the golden era of the industry, providing more than 800,000 direct and five million indirect jobs for Nigerians.
The country was acknowledged as the third largest in Africa, boasting of more than 160 vibrant textile mills. By 1985, the number of textile mills rose to about 180, employing about one million workers. Nigeria became truly the hub of textile industries in West Africa because her textile capacity accounted for 60 per cent in the sub region during the period under review.
However, the fortunes of the industry began to plummet in early 1994 as a result of many challenges confronting the sector of the economy. They include smuggling, unstable business, high production costs due to poor infrastructure and the lack of political will to implement some policies which could enhance productivity in the sector.
These developments led to the closure of various textile industries, including Afprint Plc, Aba Textile Mill, Asaba Textile Mill, Specomill, Unitex, Supertex, Royal Spinners, NTM and Oodua Textile Mill, among others. Prospects of recovery of the sector sank to new depths by 1995, when, according to experts, government pushed the country into the World Trade Organisation (WTO).
The WTO adopted agreements on Textile and Clothing, states that all quotas on textile and clothing will be removed among WTO member countries. Industry watchers viewed the agreement and government’s acceptance as a step in the wrong direction, given the nation’s fragile industrial base, as it opened the floodgate for the importation of inferior and cheap textiles in Nigeria.
Several textiles mills either closed shop or were forced to change their businesses. Companies like Aswani Textile Mill for instance, were forced to transmute into Chellarams Plc — dealing in nylon and bicycles — while Afprint Plc in Lagos became Kewalram Nigeria Limited and started selling cars.
According to Statistics from the Manufacturers’ Association of Nigeria (MAN), as at 2007, not more than 30 textile industries across the country were functioning with less than 30,000 workers. The statistics also reveal that the nine textile mills in Kaduna were closed down by the end of 2007and their workers were thrown into the labour market.
The statistics from MAN also stated that the capacity utilisation profile of the nation’s textile industry had declined by 9.5 per cent between 2011 and 2013, stressing `the capacity utilisation dipped to 50.8 per cent in 2012 from 54.5 per cent recorded in 2011, in spite of the Federal Government’s N100 billion intervention funds to the sector.“Also, the sector’s capacity utilisation further dropped to 44.9 per cent in 2013, indicating a cumulative depreciation of 9.5 per cent during the period.’’
Worried by the challenges bedeviling the sector, especially the infrastructural deficit in the country, the Federal Government, in 2010, disbursed the N100b Cotton, Textile and Garment (CTG) Revival Fund, as part of efforts to revive the industry.
With a generous interest rate of six per cent and a repayment period of five years, it was expected that operators in the textile industry would willingly access the N100 billion Cotton, Textile, and Garment (CTG) Revival Fund., which sought to revitalize the GTC industry along the entire value chain, including textile, cotton and garment production. But this was not the case. Most textile companies reportedly avoided it. According to the Director General, Nigeria Textile Manufacturers Association (NTMA), Mr. Jaiyeola Olarewaju, very few textile firms, had so far accessed the loan.
He disclosed that those who took the loan regretted doing so, when they realized that over 80 per cent of the market had been taken over by cheap imports from Asian countries. The influx of foreign textiles into the country made locally produced textiles less competitive, as they are often costlier than imported or smuggled ones.
Industry watchers believe that the first step towards addressing the challenges of the industry, is resuscitation of dilapidated infrastructure particularly lack of steady power supply. Because of Nigeria’s huge infrastructure deficit particularly, inadequate and unreliable electricity supply, manufacturers, including textile companies, are compelled to rely on generators at exorbitant cost, leading to rising cost of production.
Reviewing the state of the industry, Comrade Oladele Hunsu, the immediate past President of the National Union of Textile, Garment and Tailoring Workers of Nigeria (NNUTGTWN) said: “We are stagnated and some of the problems are the ones you are familiar with, most especially smuggling that has assumed a frightening dimension. Before now, we had some degrees of smuggling activities, but today, we have all manner of clothing coming into the country through smuggling, unchecked.
“Go to Oshodi Market, Balogun Market and others; most of the materials you see there are coming from Asian countries such as China, Malaysia and others and these have further made the industry to be worse despite the intervention of the Federal Government.”
According to him, the stagnation in the industry has caused job loss and none of the employers can boast of making profit. He said since most of the factories cannot cope because of importation of clothes and lack of energy or power, they have no choice but to lay off workers.
Hunsu noted that the N100n textile Fund recorded some significant improvements in the industry, as 1, 500 jobs have been saved through the intervention. He however lamented that efforts to put the industry back on track have been frustrated by government’s policy inconsistency. He recalled that before the introduction of the fund, government had banned the importation of textiles into the country, which was why operators hailed the initiative and also embraced it. He said it was regrettable that the same government scuttled the policy when it unbanned the importation of textiles, thus opening the floodgate for cheaper textiles to come in from Asia.
NUTGTWN corroborated Hunsu’s position in a communiqué it issued at the end of a three-day workshop for union organisers and self-employed tailors and small scale garment makers organized recently , in collaboration with Friedrich Ebert Stiftung in Ilorin, Kwara State Participants also came from co-affiliates of IndustriALL Global Union in Nigeria, namely Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and Chemical and Non-Metallic Products Senior Staff Association of Nigeria (CANMPSSA).
The communiqué signed by ex President and General Secretary of the union, Oladele Hunsu and Issa Aremu, respectively, commended the Federal Government for the intervention fund for the textile industry, but noted that financing was just one of the numerous challenges facing the textile industry in particular and manufacturing industries in general.
According to the communiqué, “key problems are infrastructural inadequacy, raw materials, electricity supply, and smuggling, counterfeiting and faking among others, which need to be urgently addressed by the government. The performance of the Nigerian textile industry remained at low ebb in the first half of 2014 due to lack of an enabling environment and inconsistency in government policy. There are 25 textile mills employing about 24,000 workers.
“Capacity utilization in the industry remains below 50per cent and growth has been stagnant since 2012. The government had talked about a new textile policy in February 2013; however there has been no progress. Unless effective steps are taken by the government to revive the industry, gains achieved in 2010 will be lost and result in job losses, thus aggravating the unemployment situation.
“Smuggled products occupy over 90 per cent of the market. It is estimated that Nigeria imports N300 billion worth of textiles and garments annually, most of which are illegally imported without paying any duties and taxes. The total amount of revenue loss on account of customs duty and VAT on this volume is estimated at N75 billion. Such rampant evasion of taxes through smuggling when the government is mobilising revenue should be an eye opener.
“ There is a crisis in the textile industry due to huge backlog of Negotiable Duty Credit certificates (NDCC) accumulated over the last two years. “This has been caused by an arbitrary suspension imposed by the Federal Ministry of Finance on utilisation of the certificates, issued by the same ministry, for duty payment. Textile manufacturers who exported their goods by factoring the grant in their price are facing a severe liquidity crisis.”
Furthermore, experts have suggested that government pursues with renewed vigour, the principles of African Growth Opportunity Act of the United States. According to them, huge opportunities abound for the country in AGOA regarding garment production, which can stimulate employment of more tailors and continued patronage of students in departments of tailoring and fashion design in the nation’s tertiary institutions.
On the way forward, stakeholders called on government to improve the power situation in the country, warning that efforts to revive the textile industry would be unrealizable unless the power situation is fixed by relevant organs of government, even as they insisted that bank loans become accessible to entrepreneurs at a low interest rate. They also urged government to cultivate the political will to introduce policies that will stimulate textile plants and bring them back to life.

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