Nigeria’s textile industry is now gasping for breath following the failure of revival measures, a sustained upsurge in the importation of textile products and a series of adverse monetary policy regimes.
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Recall that Nigeria had a rich history of robust textile manufacturing with a large domestic market along with exports to the West Africa sub-region between 1970s up till 1990s, recording the highest contribution to Nigeria’s Gross Domestic Production (GDP) and employment in the manufacturing sector.
The sector had recorded about 180 textile mills employing over one million direct labourers at its peak around 1990. It also supported huge backward integration with the cotton production value chain during the period.
However, Financial Vanguard findings indicated that decline had set in around 2005 and it had struggled since then despite the growing market size due to the rising population.
Financial Vanguard also learnt that only about five textile mills are still operational today while the cotton production value chain has vanished. The labour force is also down to less than 2,000, both direct and indirect.
Industry stakeholders have attributed the collapse to challenges including large-scale smuggling and importation, little or no power supply to the industry that is power-intensive, inconsistent government policies on tariff, insecurity across cotton production regions, and foreign exchange crises and high cost of funding which made the products uncompetitive in the face of huge imports.
Failed revival efforts
Despite the federal government’s efforts to revive local production through protection policies, the country’s textile industry has continued to struggle, leading to an upsurge in textile imports over the years.
As part of the revival measures, the Central Bank of Nigeria (CBN) has implemented various intervention programmes, including financial support, training initiatives, and foreign exchange restrictions on textile imports at the official exchange market. But all these have not yielded the required boost in the sector.
Rising trend of imports
Data obtained from the National Bureau of Statistics (NBS) from 2019 to 2023 revealed a steady rise in textile imports.
Total textile trade within the period was N1.5 trillion, with imports totaling N1.4 trillion, representing 96.5 percent, while exports amounted to N50.7 billion (3.5 percent), indicating total textile trade deficit of N1.384 trillion and highlighting a significant reliance on imported textile products.
In 2019, NBS reported that N220.5 billion worth of textile products were imported into the country; N182.5 billion in 2020; N278.8 billion in 2021, and N365.5 billion in 2022.
Despite the foreign exchange crises the figure still went up further to N377.1 billion in 2023.
On the other hand, textile exports, mostly cotton and apparels, within the period was N3.3 billion in 2019; N6.0 billion in 2020; N12.3 billion in 2021; N10.3 billion in 2022; and N18.8 billion in 2023.
The rise was mainly in Naira terms following depreciation of the local currency year-on-year, as USDollar terms, the export value declined steadily.
In the first quarter of 2024 (Q1’24), NBS also reported that of the N186.94 billion total trade value of textile products, imports value stood at N178.45 billion (95.5 percent), while exports amounted to only N8.49 billion (4.5 percent), indicating a deficit of N169.96 billion.
The decline in import also marked a huge impact of exchange rate and the general economic downturn during the period, according to the industry stakeholders.
Underwhelming performance
Consequently, the sector’s contribution to real Gross Domestic Product (GDP) has been on consistent decline over the years.
Data from NBS shows that the sector’s contribution to GDP in 2019 was 2.02 percent (N1.442 trillion); 1.9 percent (N1.332 trillion) in 2020; 1.82 percent (N1.315 trillion) in 2021; 1.72 percent (N1.286 trillion) in 2022; and 1.63 percent (N1.247 trillion) in 2023.
In Q1’24, NBS noted that the sector contributed a negative 1.75 percent to GDP, making it one of the underperforming sectors in the country.
Chinese infiltration
Findings by Financial Vanguard show a huge Chinese infiltration into the Nigerian textile ecosystem, with importation of adulterated Adire (locally made tie and dye) fabrics, also known as “Adire Chinese”.
The Chinese counterfeit Adire products have become an attractive option because they are cheaper.
Folakemi (not real name), a customer who was in the market to buy Adire as “Aso Ebi”, said she was forced to go for the Chinese option because of the cheaper price, even though the quality is not the same as the original.
“It is not expensive. The ‘Adire Chinese’ costs N3,300, which is half the price of the locally produced fabric, hence I had to go for it,” she said.
Meanwhile, the Ogun State government said it has initiated moves to tackle the menace of imported adulterated Adire fabrics, which poses a major threat to the local Adire industry.
The State Commissioner for Culture and Tourism, Sesan Fagbayi, disclosed this at an Adire exhibition in Lagos.
He said: “The State House of Assembly has commenced steps to curb the excesses or inflow of Chinese adulterated fabric.
“We are also taking it up with the National Assembly; the Representative of Abeokuta South Federal Constituency has also raised a Bill at the National Assembly that has passed its second reading now. By the time that is done probably we will have the backing of the federal government in banning this adulterated fabric out rightly.”
Tight monetary policy worsening competitiveness
The Manufacturers Association of Nigeria (MAN) has faulted the continuous adoption of tight monetary policy by the Central Bank of Nigeria (CBN), saying it reduces the competitive capacity of Nigerian products in the global market.
Commenting, Director General of MAN, Segun Ajayi-Kadir, said: “The manufacturing export value of Nigeria has declined by 166 percent to N778.44 billion in 2023 from N2.07 trillion in 2019. And the exorbitant lending rate has also resulted into a 57.6 percent drop in the share of manufacturing export to non-oil export to 24.8 percent in 2023 from 82.4 percent in 2019.
“The incessant increase in monetary policy rate (MPR) has exacerbated the cost of doing business, thereby worsening competitiveness of Nigerian products in the global market, leading to dumping of cheaper goods in Nigeria,” he added.
Enforce Executive Order 003
As a way out, Ajayi-Kadir called for the enforcement of Executive Order 003.
He said: “Importation is presently discouraging local production and putting a strain on foreign reserves as well as weakening the economy.
“Structural constraints should be addressed to reduce cost of local production, which remains significantly high.
“Whilst the structural challenges may require a long-term approach to resolve, the government could focus on the low-hanging fruits.
“It could deliberately facilitate backward integration and ensure a friendlier operating environment that will encourage expansion and inflow of fresh investments.
“There is a need to implement the new cluster industrial framework that allows manufacturers to produce efficiently for domestic consumption and export.
“The advocacy of MAN in 2016 to promote the consumption of locally made products yielded desired results as the Federal Government also formally launched the “Buy Naija Campaign”, signed Executive Orders 003 and 005 that seek to promote improved patronage and local content.
“However, there appears not to be a well-structured platform for monitoring, evaluation, control and objective interrogation of the effectiveness of these orders.”
Also reviewing the plight of the sector, the immediate past President of the National Union of Textile Garment and Tailoring Workers of Nigeria (NUTGTWN), John Adaji, also called for the enforcement of Executive Order 003, adding that the textile industry is capable of creating 2 million jobs.
“The government should revive and invest in the textile industry to create 2 million jobs in the country and as well reduce over $4 billion import bill incurred on textile and apparel annually,” he stated at the union’s annual conference recently.
Adahi said revival of the sector requires deliberate efforts by the government, referencing South Africa’s clothing and textile sector which experienced a lull due to a lack of local patronage and dumping of imported textile materials.
According to him, because of conscious efforts on the part of the South Africa government through the “Buy South Africa” Campaign, the textile and clothing sector has been revived with many jobs created.
He maintained that Executive Order 003 which mandates Ministries, Departments and Agencies (MDAs) of government to spend more of their budgets on locally produced goods was a bold and courageous move to enhance the growth of the nation’s manufacturing sector and economy that if fully implemented.
FG moves to revamp the sector
In the meantime, the Federal Government has commenced moves aimed at revamping the cotton, textile and apparel industry in Nigeria in collaboration with development partners and the private sector.
Minister of Industry, Trade and Investment, Doris Uzoka-Anite, disclosed this at two recent events.
While reviewing the activities of the ministry in the last year, she said that about $3.5 billion in investments were secured within the period to rejuvenate the moribund sector.
Uzoka-Anite stated: “The ministry is developing a resurgence plan for the Nigeria cotton, textile and apparel industry in partnership with development partners and private sector players. We have attracted $3.5 billion to unlock the textile, cotton and apparel industry.
“As you know, Nigeria’s textile and apparel industry covers the entire clothing value chain and has a strong potential for growth due to the availability of cotton and the country’s market size.
“This industry is one of the top contributors to the manufacturing sector of the economy with huge potential for employment for both skilled and unskilled labour with extensive capacity for generating export earnings and attracting foreign direct investment, therefore reducing poverty.”
Also, at the signing of a Memorandum of Understanding (MoU) with Afreximbank to establish a $3.3 billion Nigeria Industrialisation Financing Facility on the sidelines of the 2024 Afreximbank Annual Meetings (AAM) in Nassau, Bahamas, the minister said the agreement signified the partnership between the ministry, Arise Integrated Industrial Platforms (Arise IIP) and Afreximbank to revamp the cotton, apparel and textile value chain in Nigeria, adding that the financing support would further create 20,000 jobs for the country.
“This is going to cut across the cotton belt in Nigeria and also create a lot of jobs in Nigeria’s core strength in terms of cotton and textile production which used to be the pride of the country in the 1980s and 1990s.
“In partnership with Arise IIP, we are aiming to create up to $3.3 billion in project capital expenditure and generate jobs for our youth,” she added.
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