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Sun, 26 Jan 2020 00:15 GMT

Nigeria: Buhari Moves to Rescue Textile Mills


Mohammed Tanko Momoh

Wed, 20 Nov 2019 08:49 GMT

Nigeria has taken some major steps to redress the problem in the textile industry. The country dropped from being home to Africa’s largest textile industry when its more than 180 mills became moribund. The textile firms were edged out of the industry because they could not compete with the imported textile materials which flooded the market.

In a deliberate move to accelerate the revival of Nigerian textile industry, authorities have made compulsory compliance with a ban on the use of foreign fabrics to make uniforms for personnel of the military, para-military and other agencies.

Schools and health institutions and others have been directed to comply with the directive which was issued by President Muhammadu Buhari.

The Governor of Central Bank of Nigeria (CBN), Mr Godwin Emefiele, reported that compliance would reduce pressure on foreign reserves through demands for foreign exchange for the importation of clothing materials as well as boost domestic production. 

Nigeria’s Executive Order on the matter was issued in July 2019 by Buhari as a major strategy to encourage local textile mills which had over the years been comatose.

The nation dropped from being home to Africa’s largest textile industry when its more than 180 mills folded with the exception of about 25 which managed to remain afloat.

The firms were edged out of the industry because they could not compete with imported and smuggled products that flooded the market from Asian countries.

The high cost of production caused by poor electricity made their products uncompetitive and beyond the reach of Nigerians. Forty-five percent of production cost is caused by the high cost of energy, the International Textile Manufacturers Federation (ITMF) confirmed.

Another problem was smuggling of textiles into the country. Also is the poor quality of cotton seeds, lack of access to finance and poor patronage.

Compliance with the General Agreement on Tariffs and Trade (GATT) rules and quota restrictions on January 1st, 2005 coming from the World Trade Organisation’s (WTO) on Textiles and Clothing (ATC) 1995 exacerbated the situation.

Ailemhe Odion, a stakeholder, confirmed to 7Dnews that that the decline of the textile industry was also caused by the hasty accession of Nigeria to the WTO in 1995, in which the country removed protection of the industry. 

These factors frustrated the erstwhile booming Cotton, Textile and Garment (CTG) sub-sector which then became comatose. In the 1990s many of the firms shut down, some relocated to other countries and the situation turned the nation into a major importer, and cotton farming became unattractive.

The Central Bank of Nigeria (CBN) reports that more than 430,000 were thrown into the unemployment market while the country spent more than $4 billion on importing yearly.

Nigeria’s diversification programme - reducing reliance on oil and gas and the focus on production and employment - on the platform of the Economic  

Recovery and Growth Plan (ERGP) of President Muhammadu Buhari, placed the textile and garment sector as priority.

The first step taken has been the involvement of the Central Bank of Nigeria (CBN) to step-up cotton production through the Anchor Borrowing programme for small scale farmers. The programme is specifically designed to provide input and finance to farmers to boost cotton cultivation.

Nigeria slumped as the world’s 12th largest cotton producer in 2012 with 602,440 metric tonnes. According to Financial Derivatives Company, the country became 22nd globally with 291,207 metric tonnes in 2017.

Revenue from cotton dipped from $570 million in 2010 to $6.07 million in 2017 because of low yields caused by poor quality seeds, pest damage and poor demand, the company reported.

The CBN in May 2019 launched the distribution of cotton seeds to 150,000 cotton farmers to kick start the programme. It also distributed input such as fertilisers, pesticides, and knapsack sprayers with the target of engaging 300,000 farmers to achieve 450,000 metric tonnes of cotton in 26 states in the next three years.

It was placing an order for 6,000 metric tonnes of improved cotton seeds, including Genetically Modified cotton seeds, the CBN reported on May 6th when it flagged the distribution of seeds in Katsina.

No fewer than 20 ginneries in Borno, Gombe, Kano, Katsina, Kebbi, Niger and Zamfara states have been identified to off-take the cotton financed by the apex bank.

The government, in May 2019, constituted a Committee on the Resuscitation of the Cotton, Textile and Garment Industry headed by the Minister of State for Industry, Trade and Investment, Aisha Abubakar.

At the inauguration of the committee on May 23rd, Abubakar said that more than $3.3 billion was needed for the revival of the textile industry.

“The revival of textile industry is a veritable boost to the government’s agenda on diversification of the economy. It will create the much-needed employment opportunities in the value chain, save the nation the loss of foreign exchange and enhance export potential.’’

In the drive to cut influx of textile products and garments, Nigeria, aside from contemplating a ban on importation, has embarked on a deliberate campaign to spur patronage of local products. 

Godwin Emefiele reported that $59 million has been approved as single digit interest operational funds to the nine ginneries to be disbursed by the Bank of Industry (BOI).

In an effort to reduced production cost and boost production, the 36 state governments have been directed to provide captive power plants in industrial areas where textile firms are located.

President Muhammadu Buhari promised, “We have introduced Executive Orders that will encourage the procurement of Made in Nigeria goods and services” and that the government would not allow Nigeria to return to the days of exporting jobs through the importation of clothing items which can be produced locally.

He said that the textile and garment sector is being accorded priority to create millions of jobs. 

Isa Aremu, General Secretary of the National Union of Textile, Garment and Tailoring Workers of Nigeria (NUTGTWN), is happy with the interventions of the CBN and the government, especially on the use of local fabrics by uniform personnel.

Aremu, a notable unionist, told 7Dnews that smuggling must be checked to ensure the success of the plan to revive the mills.

The President of Cotton Ginners Association of Nigeria, Salman Abdullahi, told 7Dnews that the intervention to resuscitate the sector would spur economic growth, create employment and conserve scarce foreign reserves.

He called on the government to closely monitor and supervise the implementation of the various strategies to herald a revolution in the cotton and textile industry.

The President of the National Union of Textile, Garments and Tailoring Workers (NUTGTWN), Oladele Hunsu, advised the government to bridge the huge infrastructure deficits and cheap imports from Asia to make the intervention meaningful.

Popular Dutch textile firm, Vlisco Group of Netherlands, had also on November 8th, 2018 proposed forging a stronger economic partnership and to invest $200 million to assist the textile industry and create 700,000 jobs.

The CEO of the firm, David Suddens, made the promise when he visited President Buhari. Suddens said the 172-year-old company plans to use cotton grown in Nigeria for production.

“I want a new strategy that brings Vlisco manufacturing to Nigeria,” Garba Shehu, Senior Special Assistant on Media and Publicity to President Buhari, quoted the host as responding.

“I want to change the supply chain from Asia to Nigeria. For the total supply chain for cotton, textile and garment industry from weaving, spinning, printing to retail, we want to use Nigerian cotton.

“We have already started to encourage the creative industries in the country to find a voice and give them a platform across the world. I am convinced that it is time for the textile industry to move from Asia to Africa.”

Muda Yusuf, the Director-General of Lagos Chambers of Commerce and Industries (LCCI), advised the government to step up power supply before going ahead with the revival strategies.

“Nigeria is clearly the leader in Africa as far as the fashion industry is concerned. Currently, the range of fabrics produced by the Nigerian textile industry cannot support the fashion industry in terms of quantity and quality,’’ he told 7Dnews.