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Nigeria's leading finance and market intelligence news report.

Textile manufacturers flag smuggling, corruption, as deterrents to sector growth

Manufacturers in the textile sub-sector have flagged heightened smuggling activities as well as difficulty in accessing funds among many other challenges, which has affected the productivity and potential of the sector.

Hamma Kwajaffa, director-general, Nigerian Textile Employers Association (NTEA), told BusinessDay in a phone conversation that the textile industry lacks the ability to be competitive and productive with the weight of these challenges and may not stand a chance with other competitors in the trade agreement.

“The textile industry used to have over 200 active firms but now they have all closed, 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 explained.

The Manufacturers Association of Nigeria (MAN) in its 2019 annual report stated that the textile sub-sector was challenged by smuggling, counterfeiting of textile materials, difficulty in accessing funds allocated to the sector, non-implementation of policies, unavailability of cotton, poor patronage of locally made products, etc. all of which have undermined its growth.

Kwajaffa added that the invasion of smuggled and counterfeit items mainly from neighboring countries, which accounts for over 85 percent of textiles products in the country’s market drives low demand for locally produced items, adding that there are some parts of Lagos where five or six yards of counterfeit textile products are sold for N1 thousand as against the N5 thousand or more original textiles cost.

“Smugglers have better chances than us in the market because they do not employ labor, their products are cheap neither do they pay production cost or taxes” he said.

Read also:  Manufacturers squeezed as container scarcity hits raw materials supply

The DG also mentioned that corruption in the system was another major issue as import levies are being evaded “the 10 percent textile development levy on imports have not been implemented, in 2019, over $4 billion worth of textiles was imported and no levy was paid on it, similarly, in 2015, over 36 warehouses were raided in Kano alone and N316 billion worth of counterfeit goods were seized, instead of it being disposed of they were given back to the owner who just had to pay a fee to receive it,” he explained.

As a recommendation, He urged the 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.

BusinessDay findings reveal that most of the steps taken to revive the ailing sector by the federal government as well as regulatory authorities, like the ban placed on Foreign Exchange (FX) access for the importation of textiles by CBN, and intervention scheme of N100 billion tagged the Cotton, Textile and Garment Fund (CTG Fund) setup by the Federal Government seems not to be yielding the intended result, as players in the sector are unable to access it while the market continues to be dominated by foreign textile materials.

Experts advise that taking a cue from other economies like Bangladesh, which was once one of the poorest countries on earth, but was able to earn $33 billion from its textile industry in 2018 thereby reducing its poverty rate, proper harnessing of the textile industry will significantly contribute to Nigeria’s growing economy.

Some of the textile mills in Nigeria have even gone into bankruptcy due to a lack of funds and inability to repay previous loans. The lesson is that we should deal with the fundamental issues of product competitiveness in our economy. The textile industry needs to be saved from the excruciating burden of high operating and production cost,” Muda Yusuf, former director-general of the Lagos Chamber of Commerce and Industry (LCCI), said recently.

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