Nigeria has developed a series of interventions to save the textile industry from extinction, but most of them have turned out to be misplaced, leading rather to the death of the sub-sector.
“None of the interventions trickled down or lifted the sector from its present moribund state largely due to poor monitoring, implementation lapses and corruption,” Vincent Nwani, an investment consultant and director at the Lagos Chamber of Commerce and Industry (LCCI), said.
“For now, it is very difficult to find a textile company that produces 90 metre or more length for bedding in Nigeria,” Nwani added.
In 2009, the Federal Government floated a N100 billion Cotton, Textile and Garment Fund to enable key players to have access to cheap funds. Sixty percent of this fund (N60 billion) has been disbursed by the Bank of Industry (BoI), according to the bank which manages the fund, yet the number of full-fledged textile firms has reduced to three since this intervention came.
The Central Bank of Nigeria (CBN) recently set up an additional N50 billion intervention fund to facilitate the takeover of existing debt and offer additional long-term loans and working capital to existing companies in the cotton, textile and garment sector.
As of 2016, N3.4 billion had been disbursed to local firms.
BusinessDay learnt that companies that usually access intervention funds are mainly those manufacturing rugs, sweaters, towels, handkerchiefs and other related products. Experts say the government is simply throwing money at problems, especially knowing that money is not the biggest need of the industry.
They add that only African Textile Manufacturers (ATM) Limited, Angel Spinning and Dyeing Limited, and Spinners and Dyers Nigeria Limited are textile-producing firms in Nigeria.
“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,” said Grace Adereti, president, Nigerian Textile Manufacturers Association (NTMA), at a Made-in-Nigeria stakeholders’ meeting in Lagos.
“We had the revival loans but these didn’t work because our biggest problem has never been money,” Adereti said.
According to the Manufacturers Association of Nigeria (MAN), the hitherto manufacturing hubs in Kano, Kaduna and Lagos are now solitary camps with most of their factory sheds used as event centres and warehouses to store smuggled textile materials.
Last week, the CBN placed access to FX for all forms of textile materials on the FX restriction list. What, however, stood out is that most economic managers refer to fashion and designing as textile production.
This is not the first time that the government has planned a ban on textile. In 2008, it banned the importation of textiles and other fabrics but in 2015, the ban was lifted but a 35 percent import duty was placed on it.
Kalu Aja, a financial planning expert, said the ban action of FX by the CBN is good in the short term but not good as a policy for the long term.
“The ban on FX will reduce forex demand in short term. Then textile importers will devise new ways to pay for the forex from the CBN by possibly manipulating their request,” Aja said.
Nwani of LCCI said the first set victims of this policy are over 1.1 million SMEs in the fashion and furniture industry whose raw materials consist of special textiles that are not readily available in the country.
Nigeria had over 180 textile mills in the 1980s, which employed more than one million people. Some of the mills were United Nigerian Textile Limited (UNTL), Aswani Textile, Afprint, Asaba Textile Mills, and Edo Textile Mills. These firms disappeared in the 1990s as they were unable to compete in an atmosphere of smuggling and unbridled importation. Most of what are described as textile firms in the country today are fashion and design shops.
According to the National Bureau of Statistics (NBS), trade report importation of textile and textile articles declined by 52.9 percent to N92.1 billion in 2015, from N196.0 billion in 2010. But it rose by 46.9 percent to N168.6 billion in 2018, from N114.7 billion in 2016.
“Nothing much has changed in the market. The operating conditions have remained weak and if you take the fact that FX is now available, it give importers better position to resort to importation of textile materials,” Gbolahan Ologunro, an equity research analyst at Lagos-based CSL Stockbrokers, said.
Aja suggested that the government should subsidise local textile production by giving the local textile companies a 90 percent rebate on cost of generated power.
“Between 30 percent and 35 percent of textile and garment manufacturing costs are energy-related expenses. Thus, give textile plants zero percent CBN interest loan to build embedded power plants or pipelines to get gas to their factories and also apply strategic imposition of tariffs,” he said.
ODINAKA ANUDU & BUNMI BAILEY
