Changing Nigeria’s textile narrative

In the 1970s and 1980s, Nigeria had a number of textile firms across the country. The period saw the emergence of big textile firms such as Nigerian Textile Limited (UNTL), Aswani Textile, Afprint, Asaba Textile Mills, Five Star, Gaskiya, SpecoMills, Zamfara Textiles, Millet Nigeria Limited and Edo Textile Mills, among many others.

During this time, measures were taken to kick-start textile revolution in the country. Protectionists say one of the major policies that helped the industry was the ban placed on importation of textiles during and after the Civil War, which ultimately drove many investors into the industry. In 1978, the then military government further gave a boost to this industry by continuing with the ban, a policy that was to run till 1984. This led to backward integration in the sector as many textile mills became fully integrated, even as some became spinning mills.

1980s, the Nigerian textile market had become the third largest in Africa, with over 160 vibrant textile mills and over 500,000 direct and indirect jobs. In fact, by 1985, there were about 180 textile mills in the country, employing about one million Nigerians.

Dwindling fortunes

However, the fortunes of the sector began to dwindle in early 1990s. Precisely in 1994, many textile manufacturers began to feel the pinch of unstable political situation, massive smuggling and high production costs due to poor infrastructure, taxes and levies, among others.

The situation worsened in 1997, when ban on importation of textiles was lifted. There were so many outcries by industry players and well-meaning Nigerians as they warned of the consequences of that policy.

Inferior imported products flooded the market. Consequently, many big players in the industry could not survive. Many divested to other interests while others leased their premises to other companies. For instance, Aswani Textile leased its premises to Chellarams, manufacturer of dairy products. Afprint, on the other hand, went into oil manufacturing and car business. Enpee Industries became a packaging industry.

Within six years, over 50 companies had closed down, while about 80,000 employees had lost their jobs. As of today, companies such as Aba Textiles, Asaba Textile Mills, Arewa Textiles, Five Star, Gaskiya, Haffar Industrial Company Limited, SpecoMills, Zamfara Textiles, Millet Nigeria Limited, among others, have all been forgotten when textiles are discussed.

About 60 percent capacity utilisation in 1996 deteriorated to about 28 percent as of 2002. This has also deteriorated further today.

Policy intervention

The democratic government of Olusegun Obasanjo recognised the need to revive the sector and consequently imposed a temporary suspension on importation of printed textiles. This was followed by eventual ban of all imported textile products as from January 1, 2004.

Secondly, the majority of the imported raw materials used in the industry were to attract low duty rate.

Furthermore, the government took cognisance of the fact that banks were reluctant to lend to players in the industry and muted the idea of setting up a revival fund for the industry.

However, this did not take off until December 18, 2009, when the government of Umaru Musa Yar’Adua formally established N100 billion Cotton, Textile, and Garment (CTG) Revival Fund. This is currently managed by the Bank of Industry (BoI), which grants loans to textile companies at a single-digit interest rate.

Present situation

The CTG Fund has had positive impacts on the textile industry. Olusegun Aganga, former minister of industry, trade and investment, said in February 2013 that it had saved about 8,070 jobs.

However, at the moment, there are  many daunting challenges staring the sector on the face. Some of these present challenges were articulated by Paul Jaiyeola Olarewaju, former director-general, Nigeria Textile Manufacturers Association (NTMAN).

“The major problem is the influx of foreign textiles into the country. This is killing the industry. As at today, almost 80 percent of textiles in the country are imported. Though it is still under ban, it’s still smuggled,” he told BusinessDay in 2013.

A research conducted by The Economist in 2015 noted that illegally imported Chinese-made fabrics imitating Nigeria’s signature prints flood Nigeria with some Customs officials turning a blind eye to them.

The report said that dilapidated textile factories in the country’s northern city of Kaduna are what remain of the industry, which in its heyday employed 350,000 people.

According to the World Bank, textiles smuggled into Nigeria through Benin Republic each year are worth $2.2bn, as against local Nigerian production estimated at US$40m annually.

Grace Adereti, president of NTMAN, said in Lagos at a Made-in-Nigeria stakeholders’ meeting in 2017 that the industry needed an enabling environment to survive. “What we need is the enabling environment. We cannot compete with the level of smuggling and counterfeiting going on now. We used to have about 127 textile firms in Nigeria but that has come down to two or three now,” she said.

“We had the revival loans but this didn’t work because our biggest problem has never been money,” Adereti said.

Another problem faced by the sector is infrastructure problems. Erratic power situation increases production costs and reduces competitiveness of local textiles as they are often costlier than imported or smuggled ones. But this is a general problem and not peculiar to the textile industry.

Third, the government and its do not always  patronise the industry.

Revival efforts

In April 2016, Aisha Abubakar, Minister of State for Industry, Trade and Investment, took a tour of few surviving textile mills in Lagos State. Abubakar visited Spintex Mills Nigeria Limited, Lucky Fibres Plc, and Nichemtex Plc, all in Ikorodu, Lagos State.

Abubakar’s mission was to ascertain the state of the industry, hear directly from key players on the challenges facing the industry and then proffer enduring solutions.

The key players narrated all their woes to the minister. They complained about smuggling, high energy costs, import policy flip-flops and poor patronage by the public and the private sectors.

The firms earlier visited by the minister are basically rug producers and cotton processors/ exporters, which today are classified as textile firms.

Thirty-two months after the visit, these problems facing the industry are still there.

Nigeria’s lack of will to tackle smuggling head-on has been its biggest woe.

India, which began its industrial journey almost the same time as Nigeria, is today world’s largest exporter of textile products after China, with 13 percent global market share, dwarfing Germany and Italy who now come third and fourth respectively.  The country’s textiles industry is estimated at $108 billion, contributing five per cent to Gross Domestic Product (GDP) and 14 per cent to overall Index of Industrial Production (IIP).

The industry attracted Foreign Direct Investment (FDI) valued at $2.41 billion between April 2000 and December 2016, creating 100 million direct and indirect jobs with over 350 textile mills working.

Like Nigeria, India has an arid land that grows cotton used by textile firms. However, unlike Nigeria whose tanneries in Kano and Kaduna are comatose owing to poor cotton seedlings and demise of textile mills,  India has explored the opportunity to produce enough cotton to service textile mills and export 1,307.11 million kgs in 2015/16.

In the face of Nigeria’s quest for economic diversification and recovery, industry watchers want the government to take proactive steps to revive the industry.

Stakeholders say money only occupies 30 percent of the problem in the sector. According to those who spoke with BusinessDay, even if the government increases funding but is unable to stem imports or smuggling, the impact of the funding may still not be felt.

It therefore goes without saying that it is time the Federal Government pointed its searchlight on the bad eggs in the Nigeria Customs Service (NCS) who might be aiding and abetting the shoddy business of smuggling. This is more imperative now that the African Continental Free Trade Area (AfCFTA) is on the pipeline.

Stakeholders also say the government should mandate contractors of official uniforms to patronise local manufacturers.

Again, experts say the Federal Government needs to extend the services of AMCON to the industry.

ODINAKA ANUDU