Bangladesh points way to resuscitate Nigeria’s dying textile mills

Nigeria’s population is 50.8 million higher than Bangladesh’s. Both countries are poor and blessed with mineral resources and exportable cash crops – cotton.

While Bangladesh has been able to harness its cotton potential and emerged as a significant player in the global garment industry, securing its position as the second-largest garment exporter worldwide, Africa’s most populous country still struggles with its textile mills.

The South Asian country leveraged textile manufacturing to propel export-led economic development while transitioning subsequently to developed service.

Bangladesh’s garment industry roots can be traced back to the 1970s, a period when the country was grappling with the aftermath of its Liberation War and the challenges of establishing a stable economy.

In the early stages, the industry was primarily focused on meeting domestic demand, with limited international exposure. However, a series of economic reforms and strategic decisions paved the way for Bangladesh to enter the global textile market.

The economic reforms initiated in the 1980s played a pivotal role in shaping Bangladesh’s garment industry.

Recognising the sector’s potential, the government implemented policies aimed at attracting foreign investment and fostering a conducive business environment.

Incentives such as tax breaks, the duty-free import of machinery, and streamlined export procedures helped create a favourable climate for the growth of the garment industry.

Today, the sector is worth $55 billion annually, a major contributor to its gross domestic product and a major source of employment and income for millions.

Bangladesh has over 7,000 garment factories, employing about 20 million people, mostly women, according to data estimates from the World Bank.

There were things Bangladesh did right. The South Asian country de-emphasisised the primary product—cotton— and paid attention to the entire textile manufacturing value chain.

The raw material for yarn is cotton, but according to an SNV report done by the Kingdom of the Netherlands, in Bangladesh, only five percent of cotton needs are met by local production, and the rest are imported.

For knit products, 80 percent of the yarn requirements are met by domestic suppliers owing to Bangladesh’s competitiveness in its production. However, only 20 percent of the woven requirements for the garment sector are catered by local firms.

The country’s parliament passed a bill specifying the level of quality that all export firms must meet to surpass China as the number one in competitiveness.

Hence emphasis was laid on competitiveness, with the government providing market access for companies through trade negotiations targeted at removing international barriers.

More so, some Bangladesh citizens were sent to China and Europe to acquire the skills needed to run the mills.

Again, the country paid closer attention to the use of modern technology to lower costs and save the environment.

Big brands such as Walmart, H&M, Benetton, Gap and Zara were lured into distributing Bangladeshi ready-made garments.

Another key factor in Bangladesh is cheap labour with the minimum monthly wage of a garment worker at $197, which makes it the last but one lowest wage among 21 textile-making countries in the world.

The country’s remarkable journey from economic struggles to becoming a key player in the textile and apparel sector is a testament to its resilience and a compelling model for Nigeria and others aspiring to drive economic growth.

Read also: Stakeholders call for effective policy-making in driving textile industry growth

The Nigerian scenario

In the 70’s and 80’s Africa’s most populous country had robust textile manufacturing with a large domestic market along with exports to the West African region, recording the highest contribution to the country’s gross domestic product and employment in the manufacturing sector.

The sector recorded about 180 textile mills employing over one million direct labourers. It also supported huge backward integration with the cotton production value chain during the period.

However, the industry suffered under intense competition and has struggled since the 90’s despite its growing market size owing to rising population.

In a 2023 interview with BusinessDay, Hamma Kwajaffa, director-general of Nigerian Textile Manufacturers Association said the country has at least 24 textile industries but only three are functioning properly because some ministries are patronising them, otherwise they would have closed down long ago.

Textile mills across the country disappeared in the 1990s as they were unable to compete in an atmosphere of smuggling, unbridled importation, inadequate power supply, inconsistent government policies and insecurity.

To revive the industry, the country banned the importation of textiles and other fabrics in 2008. However, in 2015, the ban was lifted while a 35 percent import duty was placed on it.

Four years later, the CBN imposed FX restrictions on the importation of textile and textile materials into the country. In 2023, the country lifted the restriction.

Data obtained from the National Bureau of Statistics (NBS) show that the textile, apparel and footwear sub-sector recorded a positive growth in 2018.

The sector contracted by 1.90 percent in the third quarter of 2024 from 1.96 percent contraction recorded in the previous quarter.

Gabriel Idahosa, deputy president of Lagos Chamber of Commerce and Industry, attributed the textile mills’ collapse to the country’s lack of competitiveness in cotton production.

“The country is not producing cotton, the primary raw material at a competitive price relative to countries like China, Bangladesh and several other countries that produce cotton at a far lower price than Nigeria,” Idahosa said in a 2023 interview.

He added that the cost of textile production is very high because it is energy-intensive.

“Also, the depreciating value of the naira made the importation of machinery and cotton much higher than the price of textile products of other countries,” he said.

According to Idahosa, these factors completely knocked out the industry’s capacity to compete worldwide.

Experts say Nigeria can compete in print fabrics among textile product categories. Rolls of bright and patterned cloth have a huge market in Nigeria and Africa.

The Africa Continental Free Trade Area (AfCTA) provides the platform for Nigerian manufacturers to access markets across the continent and 1.5 billion people.

Nigeria can capitalise on its potential for raw material production and manufacturing skills, particularly in textiles. However, the government must learn from Asian economies and how they grew their textile manufacturing.