NIGERIA – The productive capacity of the sector is so low to the extent that about 90 per cent of textiles fabric needs of the country is being fed through importation.
As year 2005, the contribution of the industry to GDP dropped to less than one per cent. The market share of the industry equally dropped from 27 per cent in 2003 to 15 per cent in 2005.
The implication of this is that Nigeria now depends almost wholly on the outside world for her clothing needs. Studies carried out on small scale traders in Nigeria by analysts show that the country spends a minimum of about $158.4 (N19 billion) annually on importation of fabrics and textiles from Dubai alone.
This figure can be up-scaled six times if we consider imports from such countries as China , India , Turkey, Hong Kong, Malaysia and other textile producing countries, analysts say.
Perhaps we will better understand the dilemma Nigeria is in and start seeing the textile industry as a huge foreign exchange earner if we understand the fact that China’s textile industry, the largest in the world, contributed about $420 billion (N49 trillion) to the country’s GDP. Exports of China industry were valued at $178 billion (N21 trillion) in 2007. We must therefore, as a matter of urgency, wake up from our slumber.
The problem with Nigeria is lack of political will. For us, political will is zero in every facet of the economy. It is lack of political will that is keeping Power Holding Company of Nigeria crippled. It is lack of political will that has made government to turn deaf ears to calls by experts for the replacement of dilapidated oil pipelines. It is this same culture that has made Ajaokuta unrealisable.
Only last year, the Nigerian textile sector sacked 10,000 staffers. According to Oladele Hunsu, first national vice president of the National Union of Textile, Garment and Tailoring Workers of Nigeria (NUT-GTWN), some of the factories cut down their workforce from 500 to 250, and some from 800 to 400.
By 1996, the workforce (direct employment) in the industry was close to 140, 000. The figure has sharply dropped to 25,000. In all, over 500,000 allied jobs have been lost to the redundancies and plant closures in the industry within the last two decades.
Inconsistency in government policies, lack of protection of home industry due to globalisation and liberalisation policies, high interest rate, power crisis and high cost of fuel which have led to sharp rise in cost of production, are said to be responsible for the problem in the industry. The situation is such that the high cost of production in Nigeria has made the textile products less competitive.
It is the same picture across the entire manufacturing sector. For instance, Business Day investigation has revealed that some local plants engaged in the manufacture of foundry products have shut down and some are on the verge of being shut down as Chinese and Taiwanese manufactured foundry products flood Nigerian market unchecked.
The cases of Michelin and Dunlop, both tyre manufacturers are still fresh. Nigeria ’s harsh operating environment forced Michelin to close shop while it made Dunlop to scale down its operations.
The main death knell hit the manufacturing sector of which textile is a key unit during the period between 1999 and 2007 when the nation wholly diverted attention to partisan politics, oil and gas as well as bank capitalisation. The period between 2004 and 2007 witnessed the much vibrated politics of succession and bank recapitalisation. This shift negatively affected the power and manufacturing sectors.
According to Felix Adeduro, managing director/CEO of Banquaires Facilities Int’l Limited, who spoke exclusively with Business Day in Lagos , the bank recapitalisation drive had altered the consumption patterns and capacity of Nigerians. “Huge funds that ordinarily should be channelled to stimulate effective demand for manufactured products were diverted into acquisition of shares of the banks.” The manufacturing sector has therefore, by extension, been starved of funds.
Adeduro, whose company is currently on a strategic robust drive to revive Nigeria ’s ailing textile industry, said the textile industry received the worst blow within the stated period when the importation of trendy and cheap textile products and wears assumed notorious dimension.
He said the fortunes of local plants, many of whose systems, equipment, and management have lost touch with modern trend in terms of efficiency, patterns and textures nosedived.
A key element of Banquaires Facilities International Limited’s campaign is the immediate launching of textile industry Roll-back Initiative to associate with and complement government’s huge efforts to revamp the industry.
The major focus of this initiative will be to galvanise wide private sector-driven efforts to bring back the fortunes and lost glory of this vital sub-sector in line with government policy and plans. This is welcome.
There is a dear need to breathe life into our ailing textile sector. One is not oblivious of efforts that were made in the past to revive this comatose sector.
It can be recalled, for instance, that the administration of ex-President Olusegun Obasanjo inaugurated a committee to source for N50 billion to disburse to textile firms as soft loans.
This amount was written off then by industry analysts as one that fell short of what the textile industry needed to get back in business. But the same analysts agreed that it was a departure from government’s traditional commitment to the Bretton Woods Institutions thinking, that is, an imposed neo-liberal dogma which thrives on the blanket disapproval of any form of government interference in business.
The Umaru Yar’Adua administration promised N70 billion bailout for the bedeviled textile industry falls into the same class. The Obasanjo government was not wholly committed to the economic reform content of the so-called Washington Consensus of the Bretton Wood Institutions, which stresses, among other recommendations, that government should get out of the way of business and allow market forces to drive the economy and promote competition and innovation.
For the consensus, the role of government should be the provision of a pro-business environment and an investment-supporting infrastructure.
Recent events have proved that bailouts are the order of the day. The United States doled out $700 billion, the UK, 37 billion pounds, the Chinese came out with a $586 billion stimulus plan, Germany $135 billion, and Norway $56 billion.
Analysts have written off Bretton Woods. One of them holds the view that a system that was designed 64 years ago has, not surprisingly, proved ill equipped to deal with the fiendishly complex practices of 21st-century banking that led to the current worldwide crisis. It is believed that neither the IMF, the World Bank nor any other institution has the power to police the global financial system in a way that might have prevented the excessive risk-taking which led to the sub-prime mortgage crisis and, in turn, the credit crunch.
Another argument is that a more recent creation, the G7 Group of industrialised nations, looks hopelessly out of date without the emerging economic giants of Brazil , India and China among its ranks. And the “beggar-thy-neighbour” policies of guaranteeing savings that have sprung up in Germany, Greece and Ireland in recent days have shown that even in Europe, co-coordinated economic policy is a myth.
Gordon Brown, British prime minister, argued as long ago as January 2007 that global regulation was “urgently in need of modernisation and reform”.
Nigeria will therefore be acting right if it ignores Bretton Woods which has glaringly lost steam. The Indians and the Malaysians have scorned some of the damaging prescriptions of the Bretton Woods Institutions while implementing aspects of their reform package that are politically and economically safe, and suited to their peculiar economic challenges. Nigeria should do the same. We can do same; nothing stops us from doing so.
Let the government robustly support the textile sector. It should vigorously enforce the ban on contraband textile importation, and grant more concessions and waivers to the Nigerian textile industry. It is time to retaliate against harmful Western tariffs and subsidies by imposing tariffs against government-subsidized cheap textiles from the West and Asian countries.