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Reviving Nigeria's textile industry for economic growthMonday, December 11, 2017 > 11:15:02
The travails of Nigeria’s textile industry were rehashed recently at a seminar organised by the Nigerian Institute of Social and Economic Research, Ibadan. For a once thriving industrial sub-sector that has defied various policy measures to resuscitate, ongoing and other measures suggested signpost some hope. Success will, however, depend on tested initiatives, creativity and strong political will to see them through.
Those at the monthly NISER seminar tagged, “Competitiveness of the Nigerian Textile Industry,” recalled that the problems that had crashed the local textile and garment industry were well-known and still persistent. Apart from smuggling, high costs, lack of power, shortage of locally-sourced raw materials, prohibitive borrowing rates, inconsistent policies and low patronage. Researchers highlighted the devastating impact of signing on to the World Trade Organisation compact. Bashir Adelowo, a senior researcher with NISER, recalled that WTO’s trade liberalisation policies, to which Nigeria signed on in 1997, had failed to revamp the industry, instead, favouring rich and major exporting countries like China and India, which have since taken control of the market.
But with its estimated population of 186 million, advantage in cotton farming, the sub-Saharan African market and the popularity of its African prints – Ankara and Adire – reviving the textile industry is one key to the resurgence of Nigeria’s manufacturing sector and the economy. The federal and state governments need to adopt workable, consistent policies and muster the political will to actualise the dream. Typically, the industry is a mass employer of labour, directly in factories and through the value chain, including farm labour growing cotton, jute and silk. It lies at the heart of India’s industrialisation, where it is the second largest employer after agriculture; second to China in global textile manufacturing, generates about 45 million jobs and 27 per cent of the country’s foreign exchange inflows, according to India Brand Equity Foundation. China, the world champion, produced 54.36 per cent of global textiles in 2014, accounting for $274 billion of global textile apparel sales in 2013.
The World Bank says low income economies like Nigeria should leverage their cheap labour to develop textile industries. Bangladesh, a developing country with a population of 162.95 million and GDP per capita of a measly $1,524, defied expert forecasts to beat off competition from China and India after WTO lifted textile quotas in 2005 to export $28 billion worth of textiles in 2013, a sector that accounts for over 80 per cent of its export earnings. Textile was one leg of the tripod that drove the Industrial Revolution in England, the others being iron founding and steam power. Manchester and Lancashire grew to world fame on the basis of textiles.
Policies need to be put in place to recover and surpass past levels in the collapsed local textile industry in Nigeria that, at its peak, 1970s–1990s, featured about 130 modern factories and supported numerous other ancillary firms, providing about 350,000 direct jobs and 1.2 million indirect jobs – farmers, suppliers, transporters, dealers, traders and exporters – according to the Nigerian Textiles Manufacturing Association. Between 25 and 30 per cent of local production was exported, said the Central Bank of Nigeria in its 1995 Annual Report with over 60 per cent of raw materials sourced locally, thereby supporting agriculture. Alas, the story has since changed with only about 33 factories still standing and the local cotton industry comatose.
Chinese, Indian and other foreign fabrics have since taken over our market. The National Bureau of Statistics revealed that in the three months to September 2016, Nigeria spent N24.7 billion importing textiles; N1.29 trillion annually on such imports, according to the NTMA.
The government should clamp down on smuggling that operators say accounts for 80 per cent of our local market in defiance of a ban and import restrictions re-imposed since 2005. There should be a thorough reform and massive shake-out at the Nigerian Customs Service to rid it of corruption. The Federal Government should rally all stakeholders to revive and prosecute the National Cotton Textile and Garment Enterprise Policy under the Nigerian Industrial Revolution Plan launched in 2015, but has been sabotaged by the lack of interest by the states.
Measures such as intervention funding, including the N100 billion provided by the CBN since 2009, may not fly in an operating environment with inadequate electricity, a forex crisis and lack of lubricating oil. A report found that some beneficiaries of the intervention fund given at nine per cent interest simply diverted it to servicing existing debt obligations instead of acquiring new machinery and inputs. The N51 billion stimulus the government said it set aside in 2017 and a new move to provide lower interest loans in 2018, may not go far unless the crucial issues bordering on the adverse operating environment are addressed.
National interest should be paramount: Nigeria should make massive job creation and development of agriculture, mining, manufacturing and non-oil exports the pre-eminent objective of all policies. We should protect our agriculture and local industries. Twenty-six of our 36 states are suitable for cotton growing. We have to renegotiate with the WTO or pull out of the 164-nation global organisation. Both the World Bank and the IMF have criticised it for favouring rich nations at the expense of developing countries. The United Nations Conference on Trade and Development said market distortions caused by its free trade policies cost developing countries $700 billion in lost exports annually, with the World Bank adding that its textile quotas of 1994-2005 enriched advanced economies, but cost developing nations 27 million jobs and $40 billion in lost exports each year. Nigeria’s market is said to sustain 2.5 million jobs and more in China, India, Bangladesh, Turkey and Europe.
Through domestic and foreign content textile export, we must increase our participation in global value chain. It has been shown that trade-induced accumulation of productive knowledge creates increasing productivity in the economy. President Muhammadu Buhari should mobilise the economic management team and relevant ministries, departments and agencies to implement existing policies for Nigeria to become a world’s leading textile and apparel producers and exporters.