MARKET NEWS

By Adebayo Obajemu

…as domestic market continues to plummet

The Nigerian textile industry has not only failed to regain its past glory as a major employer of labour, but is also struggling for survival amidst significant competition from cheaper and better-designed foreign products. Available data reveal that the sector’s contribution to the Gross Domestic Product (GDP) has been in steady decline over the past five years.

Though available data highlights a decline on the domestic front, the export value is posting steady increases, widely believed to be mainly due to currency depreciation. The data also revealed a consistent rise in importation.

Placed along with footwear, data from the National Bureau of Statistics (NBS) showed that the sector contracted by 8.1 percent to N1.224 trillion in 2024 from N1.332 trillion in 2020.

Downward Spiral

A highpoint of the data for the five-year period revealed a consistent downward spiral. From the 2020 figure, the sector posted a GDP decline of 1.27 percent to N1.315 trillion in 2021, and further down by 2.23 percent to N1.286 trillion in 2022. The decline rate moved to 3.06 percent in 2023 when it recorded N1.247 trillion and in 2024 it went down by 1.8 percent to N1.224 trillion.

The data further highlights the sector’s plummeting percentage share of total GDP, which was put at 1.9 percent in 2020, 1.82 percent in 2021, 1.72 percent in 2022, 1.72 percent in 2023, and 1.63 percent in 2024.

Stakeholders have pointed at intractable and uncontrolled importation, smuggling, counterfeiting and infrastructural decay as some of the major factors for the sector’s dire straits.

In the thick of the local industry’s hard luck over the half-decade figure under review, the value of imported textile and textile articles jumped by 298 percent to N726.18 billion in 2024 from N182.53 billion in 2020.

The slew of importation rose by 52.7 percent to N278.77 billion in 2021 from 2020, rose by 31.1 percent to N365.46 billion in 2022, and in 2023, textile imports increased by 3.2 percent to N377.08 billion. But in 2024, the importation of textiles and textile articles upped by 92.6 percent to N726.18 billion, which experts attributed to the effect of the devaluation of the Naira.

But industry observers said the import figures are for officially imported and recorded transactions, showing that actual figures are likely to be three times higher as most of the importations occur informally through large-scale smuggling.

Positive Sign

Investigations revealed that, however, the sector also witnessed an uptick in export value over the period under consideration. Data points to the fact that the country’s textile and textile article exports increased by 514 percent to N36.981 billion in 2024 from N6.022 billion in 2020, also due to depreciation of the Naira.

Crunching of the data reveals that in 2020, the sector exported N6.022 billion worth of textile articles, N12.292 billion in 2021, N10.267 billion in 2022, N18.755 billion in 2023, and N36.981 billion in 2024.

Giving his take on the matter, President of the National Union of Textile, Garment and Tailoring Workers of Nigeria (NUTGTWN), Godonu Peters, decried the bleak state of the once vibrant textile industry in Nigeria.

“There was once a vibrant textile industry in Nigeria. The industry, with its umbilical linkage to the cotton sector and share in non-oil exports, is of vital importance to the economy. In the 1970s and 1980s, Nigeria was home to Africa’s largest textile industry, with over 180 textile mills in operations.

Bad News

“The industry employed some direct 650,000 workforce and indirect millions of cotton farmers, traders, and garment workers and tailors throughout the country. Regrettably, most of the factories have stopped operations due to lack of an enabling environment and inconsistency in government policy.

“Over the years, the number of textile mills has reduced from over 180 to about 20, many of which are in a perilous state. The combined workforce in Nigeria’s textile industry stands at less than 20,000 workers. The worst hit are the clothing and apparel industries.”

Buttressing this view, James Olaniwu, a big-time dealer in Adire clothes, told Business Hallmark that government policies and nonchalance to the plight of the textile industry are responsible for the death throes currently being witnessed.

He noted that: “Unrestrained smuggling/importation and counterfeiting of Made-in-Nigeria textiles is a major problem facing the Nigerian textile sector. As Africa’s richest man, Aliko Dangote, recently said, the real problem in the textile industry is not lack of cheaper power or even working capital. If you give the industries cheaper power but allow the smuggling to continue, the industries will not still survive.

“The truth is that foreign companies are using Nigeria as a dumping ground. Today, over 90 percent of textile products in Nigerian markets are either smuggled or imported into the country.”

To reverse this trend, the General Secretary of NUTGTWN, Ali Baba, enjoined the government on effective execution of intervention programmes aimed at reviving the textile industry.

He said: “Successive governments in Nigeria since 1999, following the efforts of the union and industry stakeholders, have introduced various measures and intervention programmes aimed at reviving the textile industry.

“But there is a huge gap between policy pronouncements and actual implementation. The said measures have not yielded the required boost in the sector as the real problems undermining the progress and growth of the sector have not been properly addressed.

“We are excited with the enthusiasm of the current administration to revive the textile industry. Recently, the new Minister of State for Industry, Trade and Investment, Senator John Enoh, reiterated the government’s commitment to reviving the textile sector, enhancing its value chain, and promoting Made-in-Nigeria goods to reduce import dependency.

“Government needs to urgently convene an all-inclusive stakeholders’ summit on the revival of the textile industry. The summit will discuss and review the current state of the industry, identify the key challenges and come up with practical suggestions and ideas that will support the growth and development of the industry.”

According to him, “There should also be a sustainable industrial policy in place for the country. All the things that led to the death of our industries can be traced to inconsistent industrial policy. There should be a sustainable industrial policy emphasizing the need to add value to cotton and other raw materials rather than importing finished goods or textiles from abroad.”

Government Policy

“The current administration must ensure enforcement of Executive Order 003, making it mandatory for government Ministries, Departments and Agencies as well as uniformed services to use their budgets to patronize Made-in-Nigeria textile, thereby reviving the local industries, create mass decent jobs and get our youths gainfully employed.”

In his own view, Director General of Textile and Garment Employers Federation, Mr. Kwajjafa Hamma, noted: “I will consider energy infrastructure as the main challenge. You see, we use heavy-duty machinery and such machinery consumes huge amounts of electricity.

“You can imagine today Nigeria’s population is more than 200 million and we manage only 4000 megawatts of electricity. Industrialized countries like South Africa use up to 50,000 megawatts of electricity and charge four cents per kilowatt hour while Nigeria charges over 20 cents per kilowatt hour and hence constitutes the biggest challenge on competitiveness.

“This means we cannot export and make meaningful profits even within Africa. This means that even domestically, our cost of production goes high. That means those countries whose cost is lower could bring their products on our shores and sell cheaper, thereby driving our products out of the market. With the cost of power at lower rates, their countries incentivise them on the products they export. They don’t increase power tariff arbitrarily on manufacturing since they have what’s called textile hubs, which have a separate tariff.”

As a way out, Director General of Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, also called for strict enforcement of Executive Order 003.

He stated that: “Importation is presently discouraging local production and putting a strain on foreign reserves as well as weakening the economy.

“Structural constraints should be addressed to reduce the cost of local production, which remains significantly high.

“Whilst the structural challenges may require a long-term approach to resolve, the government could focus on the low-hanging fruits.

“It could deliberately facilitate backward integration and ensure a friendlier operating environment that will encourage expansion and inflow of fresh investments.

“There is a need to implement the new cluster industrial framework that allows manufacturers to produce efficiently for domestic consumption and export.

“The advocacy of MAN in 2016 to promote the consumption of locally made products yielded desired results as the Federal Government also formally launched the ‘Buy Naija Campaign’ and signed Executive Orders 003 and 005 that seek to promote improved patronage and local content.

“However, there appears not to be a well-structured platform for monitoring, evaluation, control and objective interrogation of the effectiveness of these orders.”