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Nigeria’s opportunity to tap $38bn cotton market underexplored

To quicken expansive economic growth through an overlooked part of the agric sector, Nigeria can tap from the world’s $38.45 billion cotton industry, positioning itself competitively through its major cotton-producing states and enabling structures provided by the government.

The Nigerian Investment Promotion Commission (NIPC), in its opportunities and incentives report, notes that Nigeria’s textile industry was once ranked the second-largest in Africa, having over 250 factories all operating above 50 percent capacity with the use of home-grown cotton.

However, both textile and cotton have suffered over the years with the increased reliance on crude oil for revenue and foreign exchange (FX) earnings.

In 2020, Nigeria’s total trade earnings were N32.42 trillion, with N1.43 trillion from over 20 non-oil commodities. During this same period, Nigeria spent N330 million importing textiles and N6 million exporting same, with no record of cotton export or import, according to data from the National Bureau of Statistics (NBS).

Burkina Faso, one of Africa’s largest producers and exporter of cotton, on the other hand, earned $394 million from the export of raw cotton alone in 2019 to Singapore, Switzerland, China, Turkey, and the United Kingdom.

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Nigeria’s annual production of cotton falls between 300,000 and 400,000MT of seed cotton or 110,000MT of lint, which is about 607,735 bales of cotton lint produced majorly by small-scale farmers, with farm sizes ranging from 3-5 hectares all under rain-fed ecologies, the NIPC notes.

A report on the global cotton market by Research and Markets projects that the Global Cotton Market is expected to move from $38.45 billion in 2020 to $46.56 billion by 2027, with a CAGR of 2.74 percent within this period.

In Africa, cotton is a predominant cash crop providing income to over three million farmers, and also accounts for 15 percent of global export where it earned over $15 billion in 2018 for over 1.5 million MT of lint.

There are projections from the Organisation for Economic Co-operation and Development (OECD) that cotton export from sub-Saharan Africa will increase from 15 percent to 17 percent by 2030, with Asia and Southeast Asia being the major destinations for shipments.

This opens opportunities that Nigeria can seize in its economic development drive alongside Burkina Faso, Tanzania, Mali, and Côte d’Ivoire, who are the leading producers of cotton in Africa.

However, according to the Textile Exchange, despite the projected increased demand and export opportunities, countries may not be able to ramp up production due to various challenges, except some actions are taken.

As of 2016, Nigeria’s cotton production was 51,000MT on 253,000 hectares, its consumption and exports were 28,000MT and 25,000MT, respectively, according to International Cotton Advisory Committee (ICAC).

Anibe Achimugu, president, National Cotton Association of Nigeria (NACOTAN), told BusinessDay in a telephone interview that a major problem of Nigeria’s cotton industry was sourcing quality inputs required to achieve maximum yields, especially planting materials.

“Access to adequate, secured and timely supply of quality cotton seeds is a major challenge,” Achimugu said, noting, “Despite efforts of successive governments to give farmers access to improved seeds and seedlings, farmers are still unable to get access to good and quality seeds.”

Furthermore, farmers are unable to access the various intervention funds rolled out by the government, including the N50 billion revival funds, N100 billion Cotton, Textile and Garment fund (CTG fund), which limits the possibilities for expansion and increased productivity, he said.

“There is also no adequate access to finance for cotton farmers and when most of the funds come, it normally gets to the farmers late, which usually is after or near end of the cotton planting season,” he said.

The industry requires extensive research and development activities as well as the need to train farmers in improving cotton production.

In boosting cotton production, the textile exchange recommends that “it is necessary to create institutions and networks consisting of the government, farmers, relevant organisations that will provide funding, infrastructure, training, planting, and harvesting equipment, and data, among other things critical for production,” he said.

Although labour intensive, the Textile Exchange affirms that developing organic cotton production and manufacturing in Africa provide a crucial potential for the economy by providing local jobs and reducing rural depopulation and the incentive to emigrate. Hence, experts believe that Nigeria’s teeming population and its unemployed citizens can gain from exploring this opportunity.

Beyond the textile industry, the use of cotton extends to the pharmaceutical industry, beauty and cosmetics industry, consumer goods industry, giving options for export. Therefore, adopting the practice of value addition will further boost the proceeds from cotton export if done on the basis of commercially viable options.

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