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N500bn To N1trn Is Required For Turnaround Of Nigeria’s Textile Industry – Aisha



Hajiya Aisha Abubakar is the minister of state for Industry, Trade and Investment. In this interview with some select journalists, Abubakar, who is the chairperson of the Committee on Resuscitation of the Cotton, Textile and Garment Industry, speaks on the challenges in the textile industry, the achievements made by the Buhari administration towards its revival, as well as the tasks ahead, saying about N500 billion to N1 trillion is needed for a complete turnaround of the industry.

At the inception of the Special Presidential Committee on the Resuscitation of the Cotton, Textile and Garment Industry, what was your perception of the challenges facing the industry?

We came onboard very anxious and determined to revitalize the textile industries, as was the President’s promise during the electioneering campaign. Sentiments were high and these deepened as we toured the textile factories in Lagos, Zaria, Kaduna and Kano.  What we discovered was abysmal as all of them were at best, performing below production capacity. We discovered that most of the few staffers were only being maintained because employers do not want to lose good hands or because their parents had been active players in the sector. It was a feeling of helplessness and sadness as machines upon machines were covered in white and factories remained soundless.  Some of the textile mills we visited, had stocks that had been sitting there for ages whilst there were those that had a few stocks they were working on.

There were 175 textile mills in the country during its golden era, (i.e. 1985 – 1991) out of which today, all but 27 of them have since gone under. In an attempt to understand the sector and the many challenges it faced, we traversed, held exhibitions, and had several but endless meetings.  We even met and held extensive talks or rubbing of minds with a broad spectrum of members and leadership of the textile labour union.

There had been several attempts by past governments to salvage the textile industries. What would you say were the factors responsible for the failures of past government interventions?

The sector has been through several reforms and yet major issues still remain unsolved after several attempts to revamp the sector. The main objective or thrust of these reforms was aimed at strengthening competitiveness and improving product quality. The many attempts on the resuscitation of the textile industry failed due to the fact that the industry is saddled or burdened with a number legacy issues. The financing aspect, for example, which was singly addressed by the previous administration only served to increase their indebtedness to the banks. There is no linkage within the value chain nor do the sector players even play among themselves.

Apart from the infrastructure challenges, majorly with the high gas price, diesel and insufficient supply of low fuel pour oil; there are issues of distrust and insincerity across the line, low patronage, inadequate quantity and quality for supplies, the smuggling of fabrics and availability of cheaper options and so many more.

What is the administration doing differently to ensure that the ongoing efforts do not go the way of previous government interventions?

To drive the sustainable implementation of the Cotton, Textile and Garment (CTG) policy, as well as President Muhammadu Buhari’s policy thrust and vision in the textile industry, the government in April 2016 inaugurated a special implementation committee involving critical stakeholders with my humble self, minister of state, Federal Ministry of Industry, Trade and Investment, as chairperson. The committee is saddled with the overall task of revamping the sector and attracting investments across the value chain i.e. cotton farming, cotton processing, textile manufacturing and garmenting.

Accordingly, the committee devised strategies of stimulating patronage and domestic market for locally made fabrics which includes; ascertaining quality and source of raw materials, identification of possible linkages of producers and end-users of locally produced fabrics and the development of the garment sub-sector for increased productivity. Our aim is to accelerate the sustainable increase in the production and processing of cotton and leverage on existing efforts to increase competitiveness in the sector. The opportunities for doing so are envisaged in the Nigerian Industrial Revolution Plan (NIRP) framework which helps to quantify the potentials for sustainable value addition so that government can design its intervention strategies for the industry. Any success recorded in reviving the sector, will contribute towards actualising the goals of the Economic Recovery and Growth Plan (ERGP).

What, specifically, has the committee identified as major challenges that need redressing and what are the remedial strategies that you have put in place?

The committee identified some key challenges affecting the sector, such as lack of cotton lint, smuggling and counterfeiting, inadequate infrastructure, access to power, and funding and recommended actions to address them. We were able to facilitate the accessing of working capital to enable manufacturers acquire necessary raw materials and other essential inputs for production activities. The committee also took steps to secure loan re-financing and has recommended 60% of forex allocation from the CBN.  However, the reality is that an estimate of approximately N1 trillion is projected for a complete turn-around of the nation’s textile industry.

Funds needed by manufacturers to recapitalize have been hampered by the high interest rates charged on loans by financial institutions. The 30 percent interest rate charged in Nigeria by commercial banks would appear as prohibiting when compared, for example with the 6 percent charged in China on loans given to the textile manufacturers. Our own situation has tended to discourage prospective investors in the sector. We have accordingly recommended that government should consider the approval of the recommendation that the loans granted to the textile industries by the Bank of Industry, BOI, should be taken over by the Central Bank with a view to extending the repayment tenor. Also the accumulated 10 percent of tariff on imported textile materials meant for the development of local manufacturing sector in Nigeria should be made available to the sector players without much further delay.

One of the biggest challenges facing textile manufacturers remains the high cost of energy needed to drive their mills. How has your committee addressed this problem?

According to the International Textile Manufacturers Federation, (ITMF) power supply accounts for about 15 percent production cost in the textile industry. In Nigeria it is almost 45 percent for manufacturers in general and particularly peculiar to the textiles.  Inadequate and high cost of energy in the textiles industry has been one of the major impediments to investment in the sector.

The committee in its bid to resolve the issue of high gas pricing has secured a presidential approval for the re-categorization of textile manufacturers as strategic industrial sector as against earlier classification in the “commercial sector.”  The major implication of the policy shift is the elimination of the many bottle necks in the supply of energy to the textile mills.   Once implemented by the gas producers, gas supply to the textile manufacturers will cost only three dollars per standard cubic feet as against the old regime of 8.45 dollars.

Besides energy, there is also the crisis of scarcity of cotton lint which is a major raw material used by the textiles. What is your committee doing to address this?

The production of cotton lint which accounts for 40 percent of the raw materials required in the textile industry and has remained a critical challenge due to poor production and patronage of the local fabrics. We realize that there has been high loss of interest in cotton cultivation by peasant farmers. Also, I must say sadly that, the Federal Ministry of Agriculture and the 26 States where cotton is traditionally cultivated have not demonstrated the required interest nor taken the practical steps towards stimulating production.   However, there is the good news that we are succeeding in forecasting the Nigeria’s cotton sector to increase production by 20 percent in 2018, as farmers are encouraged by better returns due to increasing cotton prices and improved yields.

Cotton farmers require a minimum of 25,000 tons of cotton seeds to produce sufficient quantity for use by local textile mills, the Committee was only able to source 5000 tons from the Institute of Agricultural Research, IAR, of the ABU in 2017 and distributed to farmers for the preceding season. We have since put in place similar action plans through the establishment of synergy with other research institutes, the Federal Ministry of Agriculture and governments in the states where cotton is viably produced.

How would you summarise the benefits of the ongoing efforts and resources being expended in the programme of resuscitating the Cotton, Textiles and Garments industries?

The revival of textile industry is not a lost cause as it will yield a veritable boost to the government’s agenda on diversification of the economy.  It will create the much needed employment opportunities for the teeming youths, across the value chain, save the nation the loss of invaluable foreign exchange and enhance the nation’s export potential.