Nigeria spends over $4bn annually importing textiles, readymade clothing

The Director General of Nigerian Textile Manufacturers Association (NTMA), Hamma Kwajaffa disclosed this yesterday in Abuja despite government intention in recent time to revive the textile sector, the reality on ground continues to be worrisome as Nigeria currently spends over $4 billion annually importing textiles and readymade clothing.

Textiles used to be Nigeria’s foremost industry, and the second largest employer after government and utilizing indigenous raw materials such as cotton in the past.

Kwajaffa is of the opinion that Nigeria has the potential to produce for the local market of over 170 million people, which represents a large natural market for textiles, while also exporting to the ECOWAS market of 175 million people, as well as to the developed world such as the United States under AGOA and EU GSP scheme which Kenya, Ethiopia, Lesotho, Madagascar and a number of African countries are already exploiting.

According to the DG, the prevailing unprecedented harsh environment has no doubt dealt a serious blow to the already fragile industry.

He said that unless urgent steps are taken by the government to address key issues raised by the industry, the ray of hope that had arisen from the recent government initiatives may get extinguished.

Influx of smuggled goods continues to flood major textile markets in Kantin Kwari, Kano and Balogun and Oshodi, Lagos. It not only undermines the local industry, steal their jobs, and deprive government of revenue it is a drain on Nigeria’s precarious foreign exchange reserves.

He pointed out that other developing countries are helping their textile industry in many ways due to its high employment potential, noting that Ethiopia has among the most competitive power tariff at 4 US Cents/Kwh, which is a fifth of the power cost in Nigeria.

Recently, India, which is the second largest textile producer in the world after China, announced a $ 1 bn incentive package for the textile & apparel industry to create 10 million jobs in 3 years.

He commends the interest shown by the government in reviving the Nigerian textile industry. In the past 6 months, adding that the association was called by the Minister of industry, Trade and Investment, Governor of CBN and even the Vice President who is at the helm of the economic affairs, in which a list of 8 specific issues were brought to the notice of the government.

Most of the issues for which government intervention was sought are within the ambit of existing policy framework whereas some require new initiatives. Re-scheduling of the CTG loan facility by the Bank of Industry to 10+2 years was agreed by the government.

The price of gas supplied to the local industry is pegged to the American dollar and was not reviewed after the drop in global oil and gas prices. The current domestic tariff at $7.38 per MMSCF is 3 times the price of gas in international market. There is a need to review the tariff on gas supplied to the industry in Naira which should be affordable.

Scarcity of black oil has crippled the operations of the textile mills in the north. There is a need to ensure availability of the fuel oil to the textile mills by way of direct allocation from Kaduna and other refineries.

Consistent supply of certified seeds is required to ensure adequate supply of cotton to local textile industry. Under the dual exchange rate policy being currently pursued, CBN should allocate forex at official rate for meeting the need for import of essential raw materials by the textile mills

There is a huge backlog of unutilized EEG-NDDC (Negotiable duty credit certificates)- a sovereign instrument issued under the seal of the Federal government. NTMA had suggested the redemption of NDCC’s in lieu of BOI loan instalment owed by the textile companies.

The need for import substitution has never been felt stronger before. The government should persuade its MDA’s to source all their uniforms from the local textile mills. The scheme for supply of free meals to school children should be extended to free uniforms to be procured by the government from local textile mills.