Manufacturers in the textile industry are hard hit by smuggling and difficulty in accessing funds, according to industry players.
“The textile industry used to have over 200 active firms, but they have all closed,” Hamma Kwajaffa, director –general, Nigerian Textile Employers Association (NTEA), said in a phone conversation.
“We are left with foreign firms and if they decide to leave, the industry will shut down. Despite our investments in importing machines and necessary tools for production, invasion of counterfeit goods have limited our chances and is also damaging our reputation,” Kwajaffa further said.
About 85 percent of the $1.4 billion worth of textiles that flood the country’s market is smuggled, mainly from neighbouring countries, said the Textile Manufacturers Association.
Nigeria had over 100 textile firms in 1970s and 1980s with companies such as Asaba Textile Mills, Aba Textile Mills, Kaduna Textile Mills, Afprint Nigeria Plc and Enpee Industries, among others. Many of them are dead, with fewer than five now alive. Experts attribute the situation to unbridled smuggling, high cost of energy, poor patronage, poor competitiveness of local firms and lack of cotton to feed the mills.
There is a N100 billion Cotton, Textile and Garment Fund by government. Over 60 percent of the fund has been disbursed yet the textile firms are still comatose.
According to a 2019 textile sector’s year review by the Manufacturers Association of Nigeria (MAN), the sector is challenged by smuggling, counterfeiting of textile materials, difficulty in accessing funds allocated to the sector, non-implementation of policies, unavailability of cotton, and inadequate patronage of locally made textile products.
The sector’s declining performance was further validated by the Central Bank of Nigeria (CBN)’s Purchasing Managers’ Index (PMI) report, which revealed that in the full year 2019, the sector performed at an average of 53 points, declining by 8.5 percent from the 57.9 average points achieved in 2018 and a 3 points from the 54.9 average points reached in the same period of 2017.
Similarly, the second quarter 2020 GDP report compiled by the National Bureau of Statistics showed that the textile and apparel subsector contracted by 15 percent to -14.43 percent, from 1.03 percent in the previous quarter and by nine percent from the 1.42 percent achieved in 2019.
Kwajaffa noted that there were some parts of Lagos where textiles are sold for N1,000 for five or six yards of counterfeit material, stating that these are from smugglers who did not have to pay high production cost or taxes nor did they employ people.
He said corruption in the system was another major issue.
“In 2015, over 36 warehouses were raided in Kano alone and N316 billion worth of counterfeit goods were seized. Instead of disposing of the items, they were given back to the owner who just had to pay excise duties. Similarly, the 10 percent Textile Development Levy on imports has not been implemented. Last year, $4 billion worth of textiles was imported and no levy was paid on it,” he explained.
He urged government to enforce payment of the textile development levy to aid the sector growth of the industry, explaining that the executive order 003 should also be implemented.
In the first half of 2019, the CBN governor Godwin Emefiele excluded textiles from the foreign exchange (FX) market. However, plans to revive the over 100 comatose textile plants are yet to be implemented which negates the motive behind the ban placed on textile import.
“In order to build and grow a domestic textile value chain, including active mills across the country, which will benefit the economy, it is necessary to first of all provide electricity to the industries, subsidise importation of textile machines, incentivise cotton farmers and create ready off-takers for them,” Vincent Nwani a Lagos-based business consultant, said.
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