Why textile sector remains on brink despite interventions

Technology News

‘Executive Order 003 of 2017 only on paper, govt major culprit’
• Fewer than 25 of over 300 textile companies in operation
• Why Nigeria cannot export raw cotton despite the boom
• With consistent policies, Nigeria has huge potential, says Ogunlesi
• WTO exposed Nigerians to cheaper textiles

Despite years of intervention, Nigeria’s textile industry is a departure from the ideal, owing to challenges of huge appetite for importation, poor patronage, policy implementation, and a broken value-chain.

According to stakeholders, if only 10 percent of the yearly import bill of $4 billion textile fabrics is re-invested into the textile industry, the country would be a net exporter and expand its revenue from programs like the African Growth and Opportunity Act (AGOA) of the United States.

Stakeholders say the problem of the industry transcends funding, because interventions so far, have helped to increase capacity to access raw materials like cotton and retooled machinery, but poor patronage draws back the gains. Cotton grows in 26 of Nigeria’s 36 states and West Africa is the fifth-largest producing region globally.

With CBN’s intervention, operators noted that Nigeria now produces excess cotton but lacks an industry and market regulation that will uptake the raw materials for production. Exporting raw cotton creates further problems for the industry as value-added products continue to dominate importation.

Industry data showed that in 2019, 18.6 percent of all imported cotton worldwide ended up in China, the largest exporter of textiles and clothing products in the world. Chinese imports currently account for 60 percent of the print fabric market in Africa, with India supplying an additional 21 percent West Africa itself is a large market for prints and buys around 65 percent of all imports. Nigerian demand accounts for around 38 percent of total imports in the region.

Specifically, they noted that the Executive Order 003 of 2017 signed by President Muhammadu Buhari has remained active on paper as Ministries, Departments, and Agencies (MDAs) of government still import their uniforms from abroad despite the local capacity for such apparels.

Similarly, the procurement of school uniforms from abroad by many private schools and the rising dependence on used clothing and apparel by many Nigerians continue to undermine the growth of the textile sector. For African prints like Ankara, operators noted that distributors have broken the value-chain and now import directly from China with made-in-Nigeria labels.

Data from the National Bureau of Statistics confirmed that Nigeria’s importation of textile materials has been on the rise, with the country recording N200.6 billion worth of goods as of Q3 2020. The country exported N5.05 billion worth of goods during the same period.

Last month, the manufacturing PMI for the textile, apparel, leather & footwear sub-sector remained stationary, as against the recovery in November.

The Central Bank had last October, said it provided cotton producers with more than $300 million in loans in recent years to support the domestic textile industry, once Africa’s largest.

From about 600,000 local farmers across the country that grew and supplied cotton to the Cotton, Textile, and Garment (CTG) industries, today’s reality showed that less than 25 of the over 300 textile companies that were scattered across the country are still in operation, performing below capacity, as the country depends heavily on importation.

Despite the ban on imported finished textiles to protect local manufacturers and designers, having cost the economy at least $4 billion yearly, smuggled goods continue to make inroads into the country through the Benin Republic, Chad, and Niger borders.

Source: The Guardian

Read more: Why the textile sector remains on the brink despite interventions 

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