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EDITORIAL

Reviving The Textile Industry

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It is, indeed, regrettable that the textile industry, which used to be the second biggest employer of labour in Nigeria after the federal government, has practically collapsed. There are many factors responsible for the sorry state of the industry. These include the erratic power supply, high cost of production, competing cheap textile imports from Asian countries and the uncontrolled smuggling and dumping of sub-standard textile materials in the country. Sadly, very little has been done to address these nagging problems.

Other factors that hastened the collapse of the sector are high interest rates, inconsistent policies and low patronage. But findings show that one crucial issue that also led to the crash in the industry is the signing of the World Trade Organisation (WTO) protocol by Nigeria. WTO’s trade liberalisation policies, or what is known as globalisation which has proved to favour the rich and major exporting countries like China and India literally sounded the death knell on the industry in the country.

Given this circumstance, this newspaper believes that Nigeria can still leverage other advantages such as availability of cheap labour to revive the sector. If Bangladesh, a developing country with a population of 162.95 million and Gross Domestic Product (GDP) per capita of a paltry $1, 524, can defy experts’ forecasts to beat off competition from China and India after WTO lifted textile quotas in 2005 to export $28 billion worth of textiles in 2013, a sector that accounts for over 80 per cent of her export earnings, there is no reason why Nigeria cannot do better.

Alternatively, Nigeria can initiate a process to commence the renegotiation of her commitment to WTO or pull out of the 164-nation global organisation. Interestingly, both the World Bank and the International Monetary Fund (IMF)have criticised it for favouring rich nations at the expense of developing countries. The United Nations Conference on Trade and Development (UNCTAD) also noted that market distortions caused by its free trade policies cost developing countries $700 billion in lost exports annually, with the World Bank adding that its textile quotas of 1994-2005 enriched advanced economies, but cost developing nations 27 million jobs and $40 billion in lost exports each year.

Undoubtedly, in our opinion, the industry is in urgent need of a revamp. What is required is a policy initiative that will address the constraints hindering the operations in the industry. This has become imperative in view of the nation’s current economic challenges that require diversification of the economy and the development of other alternatives to crude oil. Government at all levels must develop synergy directed at recovering and, if possible, surpassing past levels in the industry. We recall with nostalgia that at its peak, in 1970s–1990s, there were about the modern textile factories which supported numerous other ancillary firms, providing about 350,000 direct jobs and 1.2 million indirect jobs – farmers, suppliers, transporters, dealers, traders and exporters – according to the Nigerian Textiles Manufacturing Association.

At that time, between 25 and 30 per cent of local production was exported, according to Central Bank of Nigeria (CBN) in its 1995 Annual Report, with over 60 per cent of raw materials sourced locally.

Institutions such as the Nigeria Customs Service (NCS), Nigeria Immigration Service, NIS, CBN, Economic and Financial Crimes Commission, EFCC, and the Independent Corrupt Practices and Other Related Offences Commission, ICPC, have critical roles to play in rejuvenating the industry. They are expected to forge a team to promote and protect the sub-sector eliminating faulty documentations, money laundering, dumping of sub-standard textile materials as well as foreigners doing business in Nigeria with visiting visas or with fake entry documents.

We are also of the opinion that the federal government should pursue vigorously the principles of African Growth Opportunity Act (AGOA) of the United States. If the opportunities embedded in that policy is exploited by Nigeria, it can guarantee employment in the sector.

It is also pertinent to point out that measures such as intervention funding, including the N100 billion provided by the CBN since 2009, may not fly in an operating environment with inadequate electricity and a forex crisis among others. The N51 billion stimulus the government set aside in 2017 and a new move to provide lower interest loans in 2018 may not go far unless the crucial issues bordering on the adverse operating environment are addressed. While finance is crucial to the revival of the sub-sector, a good business environment, special incentives like tax holidays, provision of adequate infrastructure, stable power supply and the patronage of made-in-Nigeria fabrics can be used to boost the fortunes of the sector.

 



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