Saving 10 surviving textile mills from imminent collapse

Ten surviving textile mills in Nigeria are struggling and may go under like their more than 150 counterparts.

They reel under the heavy weight of unbridled importation and policy somersaults that have lasted for over two decades. They mostly operate with outdated or worn-out machinery that breaks down at fits and starts.

They borrow from banks at an average interest rate of 20.3 percent. Each of the firms spends at least N5 million ($29,761) per month on diesel or any other form of energy, as power supply to industrial zones hits a low 8.3 hours per day. Black oil, which could serve as an alternative to diesel or fuel, is scarce. Security of cotton farmers and textile makers, who are mostly in northern Nigeria, has become a serious matter, as Boko Haram insurgents maim, kill and destroy whatever is in sight.

In areas where there is relative peace in northern Nigeria such as Kano, Kaduna and Sokoto, cotton, an essential raw material at textile mills, is often scarce. Farmers no longer see the business as lucrative, as patronage from ginneries has become low, just as it is for locally made textile materials. Out of over 210 ginneries in the 1980s, fewer than 15 are now in operation throughout a country of 174 million people.

They are also poorly patronised by the Nigerian consumers, as well as governments at state and federal levels. Ironically, these two tiers of government  sing and clap in the media, asking their subjects to buy made-in-Nigeria products.

Contracts for uniforms of the police, the army, the navy, the immigration and other paramilitary organisations are awarded to firms which find pleasure in sewing them in Europe, Asia and North America.

Year-on-year capacity utilisation has consequently fallen to 44.9 percent in the second half of 2013, from 50.8 percent reported in the corresponding period of 2012, according to latest data from the Manufacturers Association of Nigeria (MAN).

This is the fate of African Textile Manufacturers Limited (ATM), Angel Spinning and Dyeing Limited, Spinners and Dyers Nigeria Limited, Tofa Textiles Limited, Lakhi Textiles, Chellco Industries, Supertex, Zaria Industries, United Nigerian Textile Limited (UNTL) and Linatex.

Virtually all of them have now ventured into the production of other items or commodities, side by side with textiles, in order to be able to survive in an environment where they have to meet multiple tax obligations of a myriad of government agencies.

Investigation carried out by this writer shows that ATM now produces customised textile materials for specialised occasions, rather than for mass markets. An intending buyer should first of all place an order before the firm can venture into production of the customised fabrics materials.

“Textile firms now are no more producing only fabrics,” Paul Jaiyeola Olarewaju, director-general, Nigeria Textile Manufacturers Association (NTMAN), told this writer in a telephone interview.

“They also make bags, carpets, rugs, blankets and yarns in order to make ends meet. ’’

“You must understand that the major problem with this industry is the unbridled influx of foreign textiles into the country. This is killing the industry. As at today, almost 80 percent of textiles in the country are imported. No protection has truly been given to this sub-sector,” he lamented.

By 1980s, the Nigerian textile market had become the third largest in Africa, with over 160 vibrant textile mills, creating more than 500,000 direct and indirect jobs. Companies such as Aba Textiles, Afprint Textiles, Arewa Textiles Limited,  Asaba Textile Mills, Aswani Textile, Afprint, Edo Textile Mills, Five Star, Gaskiya, Haffar Industrial Company Limited, SpecoMills, Zamfara Textiles and Millet Nigeria Limited, among others, were then operating at full capacity.

But the fortunes of the sector began to dwindle in the 1990s, precisely in 1994 when many textile manufacturers began to feel the pinch of unstable political situation, massive smuggling, uncontrolled importation, high production costs (due to poor infrastructure), taxes and levies, among others.

The situation worsened in 1997, when ban on importation of textiles was lifted. There were so many outcries by industry players and well-meaning Nigerians, as they warned of the consequences of that policy.

Inferior imported products flooded the market. Consequently, many big players in the industry could no longer survive. Many divested to other interests, while others leased their premises to other companies. For instance, Aswani Textile leased its premises to Chellarams, manufacturer of diary products, while Afprint went into oil manufacturing and car business. Enpee Industries became a packaging industry. Many others completely went under.

Within six years, over 50 companies had closed down, while about 80,000 employees had lost their jobs.

About 60 percent capacity utilisation in 1996 deteriorated to about 28 percent as of 2002.

On December 18, 2009, the Federal Government set up N100 billion Cotton, Textile, and Garment (CTG) Revival Fund. This is currently managed by the Bank of Industry (BoI), which grants loans to the struggling textile players at the single-digit interest rate. Already 60 percent of the fund has been disbursed, according to the development bank.

But Mohammed Badaru Abubakar, president, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), said that the fund had failed to achieve the purpose for which it was established, owing to non-consideration of issues such as un-competitiveness of supply for raw materials, research and development, R&D and skills gap.

“The loan is also not enough to change the machineries completely to be competitive to world standard?” he queried.

In March this year, Garuba Salawa, director-general, Kaduna Chamber of Commerce, Industry, Mines and Agriculture (KADCCIMA ), told this writer that some Pakistani investors were gearing up to take over Kaduna Textile Limited (KTL), Notex and Finetex (moribund), as well as UNTL (10 percent capacity). But this is yet to happen in December, owing to what insiders to the deal describe as heavy financial requirement involved in bringing the moribund firms back to life.

Stakeholders are worried that Nigeria has become a dumping ground for Asian textiles. They express worry that Africa’s largest economy does not have any textile mill that operates at over 60 percent capacity.

They, therefore, suggest that there should be a blueprint and will to bail out these surviving struggling firms.

But they do not subscribe to total ban of textile materials but protection of the industry that will see imports become more expensive than local products, just as it was been done in the automotive industry, where imported cars are now dearer than locally assembled ones. The impact of this is that about 21  dealerships in the country have made commitments with foreign technical partners to set up vehicle assembly operations in the country.

“If you look the level of influx of products from China and other Asian countries without any form of control, then you will know why these firms cannot survive. This sector needs protection,” said Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), in an exclusive interview with this writer.

 

ODINAKA ANUDU

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