From 180 textile mills in the past to about 20 today, the Nigerian textile industry has journeyed from boom to bust. DAYO OKETOLA analyses the Central Bank of Nigeria’s foreign exchange restriction on textile imports and the implication for the ailing industry
Being further faced with rising operating cost, weak sales due to high energy cost, smuggling of textile materials, and poor access to finance, things have fallen apart for the Nigerian textile industry and the centre, of course, can no longer hold. It is just a matter of time for the requiem of the industry to be conducted if nothing is done.
The CBN governor lamented that most of the factories mentioned had all stopped operations, as only 25 textile mills are operating today at below 20 per cent of their production capacities while the workforce in Nigeria’s textile industry stands at less than 20,000 people. In Kaduna State, at least 18 major factories with 16,800 workers were said to have closed down within the same period. The industries include KTL ; Arewa Textile ; UNITEX ; and FINETEX .
As such, Emefiele, the CBN governor, during the stakeholders’ meeting in Abuja, rolled out measures aimed at reviving the country’s textile industry and saving it from total annihilation. “Our reason for adopting this posture rests on the belief that addressing impediments to their growth, will not only strengthen economic growth, but will also enable the creation of more jobs, and foster a more inclusive society.”
“Much progress has been made, but at the same time more needs to be done in order to ensure that we build an inclusive economy that supports domestic production of goods and services while offering job opportunities to teeming Nigerians. This is the only option that we have if we are to insulate our economy from volatility in the crude oil market and in the global financial markets.
“As part of its Anchor Borrowers Programme, the CBN will support local growers of cotton to enable them to meet the needs of the textile industries in Nigeria. The CBN shall also support efforts to source high yield cotton seedlings so as to ensure the yields from our cotton farmers meet global benchmarks.
“In addition, when we consider the amount spent on outfits for religious and social events such as weddings, naming and funeral ceremonies on a weekly basis, the potential market size is well over $6bn annually,” the CBN governor stated.
The Nigeria Electricity System Operator, an arm of the Transmission Company of Nigeria, had recently put the nation’s installed generation capacity at 12,910.40megawatts; available capacity at 7,652.60MW; transmission wheeling capacity at 8,100MW; and the peak generation ever attained at 5,375MW. “More importantly, the power issue needs to be addressed. It is almost impossible to achieve rapid industrialisation without resolving the issue of power and the deficit in key infrastructure.
He said, “The industry provides significant value addition to fabrics, whether imported or domestically produced. The policy contemplation of the CBN will put all of these at risk. He said, “Some of them have even gone into receivership as they could not repay their loans. The lesson is that we should deal with the fundamental issues of production competitiveness in our economy. The textile industry needs to be saved from the excruciating burden of high operating and production cost.
“Jobs have been lost, and that is why we know that while there is unemployment in our country, we ignore an industry that is the largest employer of labour after the public sector. Speaking specifically on textile, he said, “If you look at what we did in rice under the Anchor Borrowers’ Programme, we know that Nigeria has the potential and everything that is required to produce rice. And we looked at it and we felt that rice was taking a large chunk of the foreign exchange spending, and so what we did simultaneously as we were putting rice on the 41 forex restriction list, we were funding farmers to go into rice farming.
She said, “We produce materials but people don’t buy from us because they get cheap garments from outside the country. With this policy, we will be able to compete for more.”