Nigeria wants to revive its textile industry but its cotton production has to first improve

During a meeting between the Central Bank of Nigeria (CBN) and the textile industry stakeholders which took place earlier in the month, the CBN announced that it has placed restrictions on access to forex for importers of textiles and other clothing materials. This is part of the government’s effort towards reviving Nigeria’s textile industry.

“Effective immediately, the CBN hereby place the access to FX for all forms of textile materials on the FX restriction list. Accordingly, all FX dealers in Nigeria are to desist from granting any importer of textile material access to FX in the Nigerian Foreign exchange market,” the Governor of CBN, Godwin Emefiele said.

It looks like another case of putting the cart before the horse , which authorities in Nigeria have been known for, as cotton production has been on a dip in recent times. The production of cotton in Nigeria is dominated by small scale farmers – with farm sizes ranging from 3-5ha. Cotton farming in Nigeria is currently at its lowest, when compared to what it was in the 60s when it was exporting cotton to other countries. As at that time, the country had about 2 million cotton farmers.

The Director-General of Kaduna Chamber of Commerce, Industry, Mines and Agriculture  (KADCCIMA), Alhaji Usman Saulawa during a visit to the News Agency of Nigeria said that he recalled when the Kaduna State Chamber of Commerce used to issue an average of 40 “Letters of Origin” to cotton growers who exported their produce. However, due to the unfavourable policies and price fluctuations in the late 1990s, the fortune of the textile industry was drastically affected to the extent that textile mills began to shut down.

In the 60s and 70s  Nigeria witnessed a boom in its textile manufacturing industry with the industry contributing over 15 percent of GDP earnings for the manufacturing sector as well as 60 percent of the textile industry of West Africa. During this period, Nigeria had several companies which included Aba Textiles, First Spinners Limited,  Kaduna Textiles, Kano Textiles, Texlon Nigeria Limited, and United Nigeria Textiles. Unfortunately, the country switched its interest following the discovery of oil.

The government’s reliance on the oil sector really affected the manufacturing sector, most especially the textile industry. During this period, there was a drop in the production of textiles due to a reduction in the number of farmers that produced cotton, the raw materials used in producing clothes. Apart from the neglect of the agricultural sector, the sector was also affected by trade liberalization policies which were adopted after the Structural Adjustment Programme. This led to an influx of imported fabrics. All these, as well as poor electricity, further degenerated the industry thereby forcing most companies to shut down operations, making thousands of workers jobless. Nigeria crippled its textile industry without thinking about how it would help its economy grow bigger than it was.

Currently, China has more than 100,000 textile manufacturers that have employed 10 million people and contribute about 47 percent of the country’s economic growth. Little wonder it is the world’s largest manufacturer and exporter of garments.  

The Nigerian government have showed some kind of commitment and determination to revive the industry over the years. In order to achieve this, the government set up a Committee on Resuscitation of the Cotton, Textile and Garment Industry, which projected that an estimate of approximately N1 trillion ($2.76 trillion) would be needed for a complete turn-around of Nigeria’s textile industry. The government is also giving out seedlings to cotton farmers.  Apart from the government, international investors such as Vlisco Group of Netherlands said it will invest $200 million in Nigeria’s textile industry which will, in turn, create 700,000 jobs.

In 2017, China also announced its intention to revive Nigeria’s dying textile industry with a $2 billion investment. The investment was to be executed by the Rui Group which signed a $600 million investment plan with the Kano State government to resuscitate its textile industry.

Despite taking all these steps,  Nigeria is still far from achieving a positive result. This is because Nigeria’s textile industry suffers from a lot of problems which includes an unstable power supply, infrastructural deficit, the high cost of production, smuggling, high-interest rate, the influx of substandard goods and logistics. It is also worthy to note that the world has also gone beyond where Nigeria was years ago with the introduction of New equipment. It would be very difficult to sustain previously shut down factories because they will not be able to compete effectively with other industries in the world.

If these issues are not tackled, the failure recorded by previous attempts to resuscitate the sector through fiscal policy and monetary interventions will befall the move by the Nigerian government to get the mills rolling again in the country’s cotton, textile and garment companies.