Saving the textile industry

The Nigerian economy needs urgent diversification. President Goodluck Jonathan seems to understand this and has always stated his administration’s commitment to moving the economy away from dependence on crude oil exports by promoting the development of the country’s non-oil sectors.

Already, there are indications that the Federal Government effort in this regard is yielding positive result as non-oil export earnings are on the increase. Non-oil export earnings rose by 281.9 percent to $908.15 million in one month. In the month of July this year, the Central Bank of Nigeria (CBN) reported a 952.4 percent ($614.6 million) rise in receipts from export of manufactured products (including glass and glass products and plastics) and the 68.6 percent increase in receipts from exports of industrial sector.

 But more needs to be done. One key area that analysts say require urgent attention is the textile industry, an area where the country undoubtedly has comparative advantage.

The government has committed sizeable resources to revamping the textile industry. The sum of 100 billion naira has been made available through the Cotton, Textile and Garment (CTG) Revival Fund Scheme. Nigeria’s textile subsector was once vibrant, with fixed investment of $4 billion. It was second only to South Africa in the whole of sub-Saharan Africa, had 63 percent capacity of textile manufacturing in West Africa, and controlled 60 percent of textile market in Nigeria with 175 fully functional textile mills employing over 800,000 people. But lack of funds, decayed infrastructure, keen competition from imported textile materials, among other factors upturned the fortunes of the textile industry in the country.

This is why we commend the Federal Government intervention. Already, 38 companies are said to have accessed the fund, which is under the management of the Bank of Industry (BOI), leading to the resuscitation of some textile mills. According to the minister of trade and investment, Olusegun Aganga, the fund has also saved about 8,070 jobs since the disbursement commenced.

In addition to the CTG fund, the Federal Government also aims to revive the country’s textile and clothing industry by reducing the dumping of sub-standard goods into the country including textile and garment, by boosting cotton production, by ensuring uninterrupted power supply of 18 hours to 10 industrial cities, according to the minister.

We, however, feel that an industrial focus on the manufacture of clothing materials will not be in the country’s best interest. This is because the world clothing market is already in the firm grips of the Chinese manufacturers, and they come very cheap and affordable. It is hard to see how Nigeria can compete with China in this aspect.

What can really work for Nigeria, therefore, is the production of sacks or other non clothing material production. Already, Dangote Agro Sacks Limited, a subsidiary of the Dangote Group, is making environmentally-friendly polypropylene sacks mainly for internal consumption (i.e., for the packaging of its products – cement, flour, sugar and salt). The company produces 500 million 50kg bags per annum, meeting the Group’s current bags requirements.

This, we believe, is an area that Nigeria can be competitive in rather than the manufacture of strict clothing materials as has long been the focus. With the huge investments in the nation’s agricultural sector, and the increase in the local production of rice estimated to rise to about 3.4 million tonnes in 2015 as reported recently by the co-ordinating minister of the economy, Okonjo Iweala, the growth in fertiliser production, manufacturing of agro sacks is surely a very lucrative venture because these rice producers and fertiliser manufacturers need sacks to package their products.

This is an area of investment that will yield quicker and seamless returns for the resuscitated textile firms; otherwise the fund they have accessed may be dissipated with perennial complaints against the smuggling of imported textiles and the dumping policy by China and other countries that produce cheaper textile goods.