Textile Industry: Still Comatose Despite Govt Interventions

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Local production and consumption of textiles, in Nigeria predates colonisation of the country by Britain.

However, Kaduna Textile Mill, the first modern textile mill, was started in 1956 to process cotton produced in the northern region. By 1981, the textile industry had grown to become the largest and oldest manufacturing sub-sector, accounting for 22 percent of employment and 15 percent of manufacturing value added by 1984.

Before then, the textile industry had also grown to become the largest in Africa. It became important by the world standards that in Africa, only Egypt and South Africa could claim larger production capacity.

In good times, when the industry operated at full capacity, it employed 250,000 workers with about 143 mills, of which 45 were medium and large scale. They all had combine capacity of 860 linear metres.

The Nigerian Textile Manufacturers Association with membership of 95 companies then, estimated the installed capacity of its members at 13,168 rotors, 638,400 rings for spinning, 15,246 shuttle looms and 1,929 shuttle-less looms for weaving, 152 warp knitting machines, 175 flat knitting machines, 335 circular knitting machines and 187 embroidery machines.

However, the story changed in the early 90s, when the sector took massive dive abyss.

As a result of the unabated crisis in the sector, from about 90 thriving textile companies, the number was greatly reduced to just a few, with textile giants such as United Nigeria Textile company bowing to pressure, imposed by a hostile operating environment.

What went wrong?
THE problem with the textile industry could be traced to the reduction, if not the stoppage, of local production of cotton, as a result of the oil boom, which ushered in the era of quick money. People were no longer interested in hard labour associated with cotton cultivation because of cheap money that came with the black gold.
Electricity is the spirit of the industry and that became an issue, which is still affecting the textile industry till today.

The textile industry in early times enjoyed protection from Federal Government through the ban on imported textile products, but when the same government unbanned importation, trouble started. Countries such as China, Indonesia and other Asian countries seized the opportunity to dump their cheaper textile products in Nigeria. Made in Nigeria products became uncompetitive in price because of increasing production cost.

So with the influx of finished textile materials from China and other Asian countries, which are substandard but cheaper, Nigerian Textile Mills could no longer produce and break even, even when the foreign materials were inferior to local products.

Pa David Odedokun, a retired textile technologist, who spoke on the problem with the industry recently, attributed it to uncommon taste for foreign goods by Nigerians.

“So, they ignored our products and bought imported ones. Because of that mentality, about 16 years ago, after the textile companies finished their products in Nigeria, they took them to Republic of Benin, and people would go there, buy and bring them here, as imported products. That culture is still with us today. Such thinking stems from inferiority complex and lack of patriotic spirit,” he lamented.

The Situation Today
TODAY, only about 30 textile companies are in operation, including Nichemtex Nigeria Ltd. in Ikorodu, Sunflag Ltd. in Surulere and Futua textile, Funtua.

Former President of Textile Manufacturers Association of Nigeria, Mr. Jaiyeola Olanrewaju, said the existing companies could only employ 25,00 workers.
“As we always say, production level has gone down to 30 percent because of inadequate infrastructure and the influx of foreign fabrics. Printed foreign materials have been coming into the country since last year, when government decided to lift the ban on imported fabrics. The market is now flooded with foreign fabrics and the cost of local production is higher than elsewhere.”

According to him, the surviving companies are now producing only on orders from members of the public, as the companies have all stopped using their initiative to design and produce at commercial quantity for the market because of low sales.

“Those of them still in business are now producing based on order from interested members of the public for ceremonies and school uniform. The government agencies using uniforms are not helping matter, as they prefer foreign materials,” he lamented

Funding

The Nigerian textile industry may soon receive another lifeline of N50b for the revival of ailing textile factories. This time, the intervention fund is coming from the Central Bank of Nigeria and will be disbursed through the Bank of Industry. CBN’s intervention for the sector is coming amidst perception that the N100b government intervention few years ago did not yield positive result.

The Divisional head, Large Enterprises of Bank Of Industry, Joseph Babatunde, said the Central Bank has put in place another N50b special intervention fund for the sector. The fund is to be managed by BOI.

According to Babatunde, activities to be covered under the CBN Intervention fund includes, cotton ginning (lint production), spinning (yarn production), textile mills and integrated garment factories, especially those with specialty in military, para-military, schools and other uniformed institutions.

The loan, he said, would be disbursed to companies requiring working capital, as well as those looking for long-term loans for the purchase of specialised equipment and restructuring of existing facilities.

He said the industry would be funded further, when the national cotton, textile and garment policy is implemented, as taxes collected on textile imports would be automatically transferred to the BOI in a second CTG Fund.

“When the scheme becomes operational, cotton growers and garment makers will be accommodated under the programme. In addition, for garmenting, BOI is taking steps to liaise with the industry players to establish garment hubs to facilitate production for both the local and export markets,” he said.

The BoI divisional head said about 70 companies, including Nichentex Nigeria Ltd, United Nigeria Textile, Chellco Ltd of Kaduna, Zaria industry, Funtua Textiles and Sunflag textiles, among others, benefitted from the previous loan under the garment, textiles, cotton growing and ginning and CTG support services. He added that an independent review of the implementation of the scheme carried out by Fairways Resources Enterprises Ltd. in collaboration with UNIDO revealed that capacity utilisation rate in the industry, which had declined to below 40 per cent, increased to 61.16 per cent by June 2012, as a result of the intervention.

Speaking on the impact of the intervention on the industry, Babatunde said even when a total of 8, 070 jobs were saved, another 2, 197 new jobs were created, while about 1, 275 workers that were previously laid off, when the firms had not accessed the CTG Intervention Fund were recalled to their previous job positions.

Way Forward
Cotton farmers said there is need for the reintroduction of marketing board to guarantee market for cotton and to encourage the farmers to go into full-scale commercial cotton farming in the country.

A frontline cotton farmer in Kano, Alhaji Lawan Garo, stressed the need for cotton policy re-adjustment, as it has not been easy for them to access loans from banks, due to collateral bottleneck.
He, therefore, urged Federal Government to address the situation by making it easy for them to access loans through community banks, such as micro finance banks in their various communities.

Although he acknowledged that some cotton farmers benefitted from the last intervention fund a few years ago, Garo called on government to revisit the issue of Export Expansion Grant, and make it more functional and vibrant. This, according to him, would make farmers to increase their production.

Continuing, he said, “Other area that can be of help to cotton growers is when government brings back defunct Marketing Board that will guarantee minimum price for the commodity because the government will just be getting the product directly from farmers.”

Garo, who is also one of the major players in the leather sector urged the National Seeds Commission (NSC) to play a significant role in cotton segment of the industry, by creating more awareness amongst farmers on the right seeds, when and how to use same.

“Government needs to also try as much as possible to see that modern seeds are provided. This issue of biotechnology should play a key role in this aspect,” he explained.

While commending efforts at diversifying the economy, Garo called on government to involve relevant stakeholders in the diversification agenda for positive results.

Commenting on the garment industry, the business man explained that the main problem with the industry was not solely and fundamentally money.

“Smuggling is a bigger problem we see as being more severe than money,” he said.

Other problems, according to him, include counterfeiting, as lesser quality products are being produced outside the country and smuggled into the country. “That is why we are calling for stiffer penalties against smugglers.”

The Secretary General of National Union of Textiles, Garment Workers of Nigeria (NUTGWN), Comrade Isa Aremu said operators in the sector made significant progress with the intervention fund they received from the Bank of Industry, adding that it was too small for much bigger impact in the sector. He said the intervention came when many of them had become too weak to be revived.

“About 120 textile and garment firms shared the N100b, which was not enough to revive the entire industry. You will recall that the CBN spent as much as N3trn to save six banks during the economic crisis in 2009. CBN also appropriated N250b for few GENCOs and DISCOs in the energy sector. So, the intervention fund for textile was miserably small. Even at that, it was not a grant. The attraction is that it is a longer term funding, while the interest rate is at single digit. The truth is that as small as the intervention fund was, it helped to stabilise and even revive some closed factories.

“In 2010, the Federal Government introduced N100 billion cotton, textile and garment Revival Scheme to be managed by the Bank of Industry (BOI).



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