OPINION: MUCH ADO ABOUT THE TEXTILE INDUSTRY

Following the debate on a motion sponsored by Senator Kabir Barkiya from Katsina State during a plenary on “Urgent need to revamp the nation’s comatose textile industry,” the National Assembly has appealed to the Federal Government to provide the necessary infrastructural facilities, especially power supply to local textile manufacturing companies, to revamp the industry. The Senate also called on the government to encourage local textile manufacturing companies by providing them with soft loans and easy access to credit facilities through the Bank of Industry (BoI). During the debate, Sen Barkiya said the textile industry played a significant role in the manufacturing sector of the economy, with a record of over 140 companies in the 1960s and 1970s. He said: “The textile industry recorded an annual growth of 67 per cent and, as of 1991, employed more than 25 per cent of the workers in the manufacturing sector. The textile industry was then the highest employer of labour apart from the civil service.” He noted that the industry had witnessed a massive decline in the last two decades, with many companies such as Kaduna Textile, Kano Textile and Aba Textile, among others, closing shop and throwing their workers into the labour market.

An economic and financial analyst, Mr David Ibidapo, pointed out that the amount spent on importation of textiles and garments into Nigeria can fund more than half of the nation’s budget deficit. He told the News Agency of Nigeria recently in Abuja that it was commendable that the Central Bank of Nigeria placed access to foreign exchange for all forms of textile materials on the forex restriction list.

The CBN Governor, Mr Godwin Emefiele, had recently explained that Nigeria currently spends above $4bn annually on imported textiles and ready-made clothing. Ibidapo also noted that the restriction would reduce pressure on forex and inspire local production of textiles for both local and international consumption. “This is a good initiative by the CBN because if you look at what we spend on importation, it is about 50 per cent of our budget deficit and imagine if that amount is being generated internally, it will automatically impact on our Gross Domestic Product. “This will also inspire local production of textiles with the single-digit rate the CBN is promising local textile industries that are interested in getting loans. “It will also lessen pressure on forex as demand for it to import these textiles into the country pressures down the value of the naira against the dollar,” said the expert.

According to him, it is high time the nation controlled the levels of goods imported as too much dependence on importation is killing local industries due to unhealthy competition with foreign goods. Ibidapo added that considering Nigeria’s rising population, it served as a very good investment hub for foreign investors and companies because of the very ready market it had waiting to buy the goods. “However, once we begin to ban some items that we have the capacity to produce then this same rising population will purchase what we are locally producing and the sectors will begin to contribute significantly to the GDP. “The only way we can alleviate poverty is to grow the economy at an average of 10 per cent every year and we are still struggling to do two per cent. “So, we need to continue in the direction the CBN has toed and it is also good that loans will be given to the textile industry value chain at a single-digit interest rate,” he said.

Ibidapo reasoned that in the long run, it would boost the country’s GDP and create employment. This, he said, was because when the factories began to boom, there would be more employment which would translate into income that would be circulated in the economy to achieve the needed growth. He, however, said that achieving growth through such initiatives was solely dependent on the government willingness to be committed to the policy and ensure it clamped down on smugglers. “I think we can achieve the desired result only if the government can really reduce the activities of smugglers and make the process of getting loans for the textile industry not too complex. “Professionalism and specialization will also improve, the government should be committed to the policies and in making it work; it is very achievable. “If they can replicate this in other sectors and try to boost production of the items we import in our country, we will produce for the country and also export as demand for these products will increase and with that, the value of our currency will begin to appreciate,” Ibidapo explained. In 2015, the CBN restricted the availability of foreign exchange to the importation of 41 items which could be competitively produced within the economy and the list has increased over time.

Recalled that, the former Minister of State for Industry, Trade and Investment, Hajiya Aisha Abubakar made it clear that the Federal Government is working round the clock to revive textile Industry. Speaking when she paid a working visit to the headquarters of the National Union of Textiles Garment and Tailoring Workers of Nigeria (NUTGTWN) in Kaduna she reasoned that the revival of the textile industries is very dear to the heart of this administration under President Muhammad Buhari. Abubakar indicated that the present government had reviewed the present policy on cotton, saying, once we produce cotton enough, we can supply our textiles.  Also having gone round I understand that the power issue is also necessary for our textiles. So since 2015, the sector had remained very dear to our heart. This administration under President Muhammad Buhari will definitely do something.  “Without mincing words, we are working round the clock to revive the textiles. The commitment and passion are there,” she stressed.

Earlier, the General Secretary of the Textiles Workers Union, Comrade Issa Aremu commended the Federal Government for launching the Economic Recovery and Growth Plan (ERGP). However, he opined that ‘it is surprising the National Cotton, Textile & Garment (CTG) policy was not built into the ERGP, saying, “The government should ensure the implementation of Cotton, Textile and Garment (CTG) policy as adopted by the Federal Government since 2014.” He added, “In spite of the efforts by the Federal government, the textile industry is yet to revive as only recently, the industry recorded about 700 direct job losses due to retrenchment in some of the remaining factories.

The textile industry in Nigeria is one that ought to be very vibrant and thriving, creating employment opportunities, generating wealth, reduce poverty, increase the capacity utilization of industry, make the economy strong and increase the revenue base of the country, but the textile industry in Nigeria has been on a steady decline, apparently due to a number of identifiable factors which include among others, infrastructure decay, lingering economic recession, inconsistent government policy, energy crisis and the propensity of an average Nigerian for imported textile products. To a large extent, the persistent crisis in the energy sector, particularly as it relates to electric power generation and supply has over the years remained a major albatross to sustainable growth and development in the real sector of our economy. Energy is vital and central to industrial growth and economic development in any society. In a developing economy such as ours, achieving a stable electricity generation and supply should be top on our priority; which the present government is undertaking A situation where manufacturers and industrialists rely on alternative source of power supply to sustain their production level and remain in business does not augur well for our economy. In fact, from experience, it has rather proved to be counterproductive, as, in the long run, it makes a negative impact on the overhead cost with corresponding effect on the eventual cost of goods produced by the company. To this end, President Muhammadu Buhari, recently, ordered that immediate attention be given the revival of ailing and moribund textiles, mining and agro-based industries. Buhari gave the directive when he received a delegation of foreign investors, who were proprietors of Olam Farms Nigeria Limited, led by Mr. Mukul Mathura.

President Buhari declared that the creation of more jobs for Nigeria’s unemployed youths was the key objective of his administration’s economic agenda and will be pursued with the greatest possible dedication. He said: “I still recall with clarity that at some point, the textile industry in Nigeria was employing about 320,000 Nigerians. But today, the same industry employs far less than 30,000 people and the factories operate below capacity or they are completely closed. “I have made a promise to Nigerians that jobs will be created as part of efforts to revive the economy and that promise will be fulfilled. We will move as fast as we can to resuscitate the textile and mining industries, and also improve production in our agricultural sector. “Now that we are trying to create jobs, we cannot allow industries and factories to close down. Instead, we should be making every effort to ensure that we re-open the closed ones and attract new ones to reduce unemployment.” The President further stated that his administration would encourage investments in agriculture and other sectors of the economy by creating a more favourable environment and enabling laws, stressing that he had already ordered some immediate interventions to address current challenges faced by industrialists.

It is instructive to note that, the textile industry played a dominant role in the manufacturing sector of the Nigerian economy. With a record high of over 140 companies, Nigeria witnessed a boom in the textile manufacturing industries in the 1960s to 1970s with companies such as Kaduna Textiles, Kano Textiles, United Nigeria Textiles, Aba Textiles, Texlon Nigeria Limited, First Spinners Limited, amongst others, employing about a million people, contributing about 15 per cent of the manufacturing sector earnings to the GDP of the Nigerian economy and accounted for over 60 per cent of the textile industry capacity in West Africa. The story however changed for the industry in the 1980s. Following the oil boom, the government became totally reliant on oil and abandoned agriculture. The neglect of the agricultural sector had an adverse effect on the textile industry. The production of cotton, the basic raw material used for the manufacture of clothes regressed rapidly as its production capacity declined by 50 per cent.

In addition, the economic regression meant that manufacturers could not afford to import sophisticated modern equipment which could have facilitated the production process. Similarly, textile manufacturers and fabric designers who could afford to import raw materials procured the materials at an astronomical cost which had an effect on their business. This meant the textile industry had insufficient and at times, no raw materials to work with. Also, the trade liberalization policies adopted in 1986 following the implementation of the Structural Adjustment Programme (SAP), saw the flooding of imported fabrics and finished goods, thereby degenerating the manufacturing capacity of the industry. By the 1990s, the degradation of infrastructure especially the lack of stable electricity supply affected textile manufacturers as they could not keep up with the strains of production and this led to the closure of a number of textile companies with hundreds of workers sacked and retrenched. By 1998, the industry was operating at a capacity of just 28 per cent.

The abysmal performance of the textile industry and indeed, the entire manufacturing sector is indeed a sad tale. The sector which played a major role in boosting of nation’s economy and development is suddenly a shadow of itself as the country’s manufacturing capacity especially the textile industry is at an all-time low and its poor performance is having a bearing on the Nigerian economy. Despite the fact that oil, Nigeria’s major source of income is in a declining state and its overall contribution to the economy has reduced drastically, the manufacturing sector unfortunately lacks the capacity to provide relief to Nigeria’s ailing economy as it only contributes a paltry seven per cent to the Gross Domestic Product (GDP) of the economy with the textile, apparel and footwear industry contributing about N1.8 billion of that in 2015, according to the National Bureau of Statistics (NBS) report.

However, it has however been proven that the textile industry is indeed a driver of growth and employment globally. For example, the exports of the textile industry in Hungary edged up to 3.2 per cent in 2014 to $1.62 billion from $1.57 billion in 2013. With a strong labour population of over 43, 000 in the textile industry, the involvement of medium-sized enterprises in the industry and a robust export of textile products to countries such as Germany, Italy, Austria, France and Romania, a tremendous improvement has been forecasted for Hungary’s economy in 2016.

The influence of the textile industry is bigger in China with more than 100,000 manufacturers employing over 10 million people. The industry is estimated to contribute about 47 per cent to the country’s GDP with its value of garment export believed to be around $153.219 billion as of 2013. With its percentage of the global garment market at 38 per cent, China is the world’s largest manufacturer, exporter and consumer of garments.

The Chinese textile industry remains competitive due to the continued investment in the domestic industry. Given the importance of high productivity of the textile industry in boosting economic growth and the standard of living of the people as evident by the examples stated above, and with the growing success of the country’s fashion designers today as seen in both local and international fashion shows, it is apparent that Nigeria must give priority to the textile industry and indeed, the entire spectrum of the manufacturing industry to improve the fortunes of the Nigerian people and their economy. It would be recalled that, as of the year 2005, the contribution of the industry to GDP dropped to less than one per cent. The market share of the industry equally dropped from 27 per cent in 2003 to 15 per cent in 2005. The implication of this is that Nigeria now depends almost wholly on the outside world for her clothing needs. Studies carried out on small scale traders in Nigeria showed that the country spends a minimum of about $158.4 (N19 billion) annually on importation of fabrics and textiles from Dubai alone.

This figure can be up-scaled six times if we consider imports from such countries as China, India, Turkey, Hong Kong, Malaysia and other textile producing countries. Perhaps we will better understand the dilemma Nigeria is in and start seeing the textile industry as a huge foreign exchange earner if we understand the fact that China’s textile industry, the largest in the world, contributed about $420 billion (N49 trillion) to the country’s GDP. Exports of China industry were valued at $178 billion (N21 trillion) in 2007. We must, therefore, as a matter of urgency, wake up from our slumber.

In good times, when the industry operated at full capacity, it employed 250,000 workers with about 143 mills, of which 45 were medium and large scale. They all had a combined capacity of 860 linear metres. The Nigerian Textile Manufacturers Association with the membership of 95 companies then, estimated the installed capacity of its members at 13,168 rotors, 638,400 rings for spinning, 15,246 shuttle looms and 1,929 shuttle-less looms for weaving, 152 warp knitting machines, 175 flat knitting machines, 335 circular knitting machines and 187 embroidery machines. However, the story changed completely in the early 90s, when the sector nosedived abysmally. As noted earlier, because of the unabated crisis in the sector, from about 90 thriving textile companies, the number was greatly reduced to just a few, with textile giants such as United Nigeria Textile company bowing to pressure, imposed by a hostile operating environment. The problem with the textile industry could be traced to the reduction, if not the stoppage, of local production of cotton, as a result of the oil boom, which ushered in the era of quick money. People were no longer interested in hard labour associated with cotton cultivation because of cheap money that came with the black gold. Electricity is the spirit of the industry and that became an issue, which is still affecting the textile industry until today. The textile industry in early times enjoyed protection from the Federal Government through the ban on imported textile products, but when the same government unbanned importation, trouble started. Countries such as China, Indonesia and other Asian countries seized the opportunity to dump their cheaper textile products in Nigeria. Made in Nigeria products became uncompetitive in price because of increasing production cost. So with the influx of finished textile materials from China and other Asian countries, which are substandard but cheaper, Nigerian Textile Mills could no longer produce and break-even, even when the foreign materials were inferior to local products.

It is in view of this that the president rightly noted that, today, we have on our hands an army of both skilled and unskilled unemployed especially youths in the society, with its attendant socio-economic challenges. Although we have made appreciable impact through our employment generation strategies to provide jobs with a view to engaging some of the unemployed members of the society, the resuscitation of the textiles industry therefore will be a tremendous boost to our efforts in job creation, as it will help in engaging, especially some of the unskilled labour in the country. We all, including members of the general public and stakeholders in the textile industry, have a role to play. We must ensure and increase our patronage of made in Nigeria fabrics. According to the popular saying: “Rome was not built in a day”, we all have a duty to promote and support our local industries through continuous patronage. In doing this, we are not only encouraging the growth of our local industries but also assist in creating job opportunities for the teeming youths in the country. Our preference for foreign fabrics must be reduced to develop and sustain our local textile industry.

Written by Jide Ayobolu.

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