Textile & footwear sector fortunes look up

The footwear, apparel and textile sector (categorised as one) has shown signs of all-round improvement as players continue to demonstrate doggedness to survive the Nigerian environment, despite continuous challenges that have brought a number of them to their knees.

Capacity utilisation is one key way of determining the health of a sector or industry because it shows the relationship between actual output produced and potential output that could be produced with installed equipment. In the first half of 2013 (H1 2013), capacity utilisation in the sector was 37.4 percent. But by the second half (H2 2013), this had risen to 44.9 percent.

However, 2012 performance was better as capacity utilisation in H1 2012 was 46.7 percent, while that of H2 2012 was 50.8 percent, data from the Manufacturers Association of Nigeria (MAN) have shown.

The players are also sourcing more raw materials from home as local input content in H1 2013 was 52.86 percent while that of H2 2013 was 60.79. These are better than 2012 figures of 34.46 percent in H1 2012 and 47.22 percent in H2 2012, the MAN’s data show.

Reduction of inventory (stock) is a key factor in business success. Inventory in H1 2012 was way up to N1.6 billion. But this was reduced to N418 million in H1 2013 and to N401 million in H2 2013.

Moreover, the players ignored a myriad of challenges to add 53, 955 workers by the end of 2013. The players further invested a total of N2.714 billion in 2013 in land and building, plants and machines, furniture and equipment, motor vehicle and ongoing construction, Real Sector Watch gathered.

Analysts say this is an indication that the sector will perform better if issues such as business environment, infrastructure and business models are tackled.

Paul Jaiyeola Olarewaju, director-general, Nigeria Textile Manufacturers Association (NTMAN), had in a chat with Real Sector Watch, said there were only 10 surviving fabrics makers in the country, as textile and apparel players face compounded problems such as unbridled imports of cheap products from Asia, erratic power supply, poor access to finance, absence of black oil by Northern players and non-patronage of products by Nigerians and government agencies.

“Government uniformed agencies do not patronise the industry. Government often gives out contracts to people who go abroad and import the uniforms. Nigerians too must appreciate indigenous products,” he had said.

There is a spike in the leather/footwear sector around the world now. Bangladesh’s Daily Star reported that between July 2013 and April 2014, the country’s leather industry exported $1.06 billion worth of products, thus dwarfing $980.67 million exports receipts for the whole of fiscal 2012-13. This is on the back of competitive pricing and quality improvement. Many buyers are diverting orders from China, where the production cost has increased significantly, thus providing opportunities for Nigeria, which has requisite raw materials.

Nigeria’s leather/footwear industry is worth $680 million, said Olusegun Aganga, trade and industry minister, who had earlier set up a committee to ensure players generate N20 billion annually. But players point out lingering problems.

“First, a pair of shoes from Asia is as cheap as N1000. How can you compete with high cost of production? Though what we have here are stronger, our people prefer foreign shoes,’’ said John Wabuke, a shoe-maker in Aba, South-East Nigeria.

Stakeholders say issues such as poor technology, alarming rate of consumption of animal skin, under-pricing of hides and skin, absence of national standards, unbridled export of animal skin, among others, should be addressed to put the industry at the forefront of competitiveness.