The Federal Government has intervened in the wobbly textile industry, as it negotiates with gas suppliers to cut price for the players from $7.8 per standard cubic metres (scm) to $3.85 per scm, industry sources told BusinessDay.
But this may not likely lift the struggling industry as key issues that hurt the sub-sector remain unsolved.
The industry sees the proposed gas price reduction as a welcome development, but believes that until issues around poor patronage, unbridled importation and smuggling of textile products are resolved, the move may achieve minimal result.
“The gas price is good, though it is not yet in operation,” Hamma Kwajaffa, director-general of Nigeria Textile, Garment and Tailoring Employers Association (NTGTEA), told BusinessDay.
“But the level of importation and smuggling in this country are killing the few surviving companies. They used to run three shifts but they have closed down these shifts,” he said.
He explained that the industry is operating at 20 percent capacity and lacks basic infrastructure.
He claimed that the local surviving textile firms can meet domestic demand if given the needed policy push.
“The Executive Order 003, for instance, has been pronounced, but it is not being implemented. So we have low patronage in the industry,” he added.
Independent checks show that a few textile firms are still competing with imports. They include African Textile Mills, Angel Spinning and Dyers Limited, Sunflask, and Nichemtex, among others.
Kwajaffa said there are about 24 textile firms today.
However, most of the firms are producing caps, rugs, sweaters and towels. Some are combining production of textile products with other businesses.
In 2019, the Federal Government floated a N100 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), which manages the fund.
The Central Bank of Nigeria (CBN) recently set up an additional N50bn 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.
Recently, the Central Bank of Nigeria (CBN) placed access to FX for all forms of textile materials on the FX restriction list.
“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 meter or more length for bedding in Nigeria,” Nwani added.
Nigeria had over 180 textile mills in 1980s, which employed more than one million Nigerians. Some of the mills were United Nigerian Textile Limited (UNTL), Aswani Textile, Afprint, Asaba Textile Mills, and Edo Textile Mills. These firms disappeared in 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 in rose by 46.9 percent to N168.6 billion in 2018 from N114.7 billion in 2016.
ODINAKA ANUDU
