Learning from Bangladesh’s fabrics industry
Nigeria can pick some lessons from the way Bangladesh has grown and managed its fabrics industry.
Nigeria’s total non-oil export earnings from more than 25 commodities in 2018 was $3.3 billion (N1.19 trillion), according to the National Bureau of Statistics (NBS), but Bangladesh, once one of the poorest countries on earth, earned $33 billion from the industry.
Bangladesh has 5,000 garment factories that engages about 20 million people, mostly women, which pushed the extreme poverty in the Asian country down to 12.9 percent, according to the World Bank. Nigeria’s poverty rate is nearly 50 percent, with fewer than 20 firms making caps, sweaters, handkerchiefs and other types of textile.
Yale economist Ahmed Mushfiq believes that Bangladesh’s recent economic success is in part attributable to the flourishing garment manufacturing industry.
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 in Bangladesh only five percent of cotton needs are met by local production and the rest are imported, according to an SNV report done by the Kingdom of the Netherlands.
For knit products, 80 percent of the yarn requirements are met by domestic suppliers because the country has a competitive advantage in that area. However, only 20 percent of the woven requirements for the garment sector is catered by local firms.
The country’s parliament passed a bill specifying the level of quality which all export firms must meet in order to beat China to 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 of Bangladesh citizens were sent to China and Europe to acquire the skills needed to run the mills.
Again, the country paid a 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.
Stitch Dairy, a local Bangladeshi publication, said that that the South Asian country was able to enjoy duty-free advantage to export garments to the European Union, the US and Malaysia.
Experts equally attribute Bangladesh’s success to a convivial business environment with minimal government influence and low taxes, which attracted Chinese and Vietnamese firms to Bangladesh.
Textile Today reported in 2015 that firms from Singapore, Japan, Taiwan and South Korea, which had traditionally relied on low-cost production in China, were shifting out of China and making their way to Bangladesh as a result of well developed Bangladeshi textile value chain that guarantees three to five years return on investments.
Another key factor in Bangladesh is cheap labour with 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.
However, Nigeria has even more advantage than Bangladesh in terms of labour cost as its recent minimum wage hike to N30, 000 amounts to only $83.3 per worker.
“Some of the mills in Nigeria have even gone into receivership as they could not repay their loans. The lesson is that we should deal with the fundamental issues of production competitiveness in our economy. The textile industry needs to be saved from the excruciating burden of high operating and production cost,” Muda Yusuf, director-general of the Lagos Chamber of Commerce and Industry (LCCI), said recently.