BusinessDay, Nigeria
More than half of the remaining 40 mills face extinction this year.
Recent reports have shown that before 1997 the Nigerian textile industry was the second largest in Africa after Egypt with above 250 vibrant factories and over 50 percent capacity utilization.
Again, market survey has shown that the local textile market has a share of about 20 percent of Nigerian textile products with the balance of 80 percent being controlled by assorted imported fabrics.
The textile industry has its unfair share of Nigerian’s penchant for foreign goods, smuggling, faking and counterfeiting of Nigerian made fabrics as smugglers now produce faked and counterfeited products of popular textile companies in the country.
The recent spate of closure in the industry was driven largely by smuggling at the borders, failed government policies, high operating cost arising from prohibitive raw materials, energy cost and sheer lack of political
commitment to industrialisation by Nigerian politicians.
Business Day gathered that the loss of job in 2014 was highest when the International Textile Industry (ITI) closed down its Isolo and Ikorodu, factories both in Lagos, with about 800 people out of job, First Spinner Ltd, Ikorodu, Lagos, closed down with about 500, Bhojr Textile Industry closed down with about 700 people out of job, Reliance Textile Ikeja, Lagos, closed down with about 500 people out of job. Fahibdayekh and co Ltd in Kano, closed down with more people sent to the labour market, Atlantic Textile Mill in Lagos was finally closed down in 2014 with about 800 people out of job after a partial closure in 2014.
Other existing factories have been cutting down jobs due to inability to cope with high cost of production and inability to compete in the market.
Oladele Hunsu, the first national vice president of the National Union of Textile, Garment and Tailoring Workers of Nigeria (NUTGTWN), told Business Day that most of the factories have cut down their workforce from 500 to 250 while some reduced from about 800 to 400. When these are put together about 5,000 people are so far out of job as at last year’s statistics. “With the current global economic meltdown, especially the stock exchange, there may be a total closure of textile industries this year.
In 2014, the loss of job in the sector was about 10,000 when the largest textile company in the country, the United Textile Mill in Kaduna State closed down with about 5,000 people sent to labour market. Atlantic Textile Mill in Lagos also partially closed down while other existing factories have been cutting down job.
According to NUTGTWN, membership of World Trade Organisation (WTO) and subsequent liberalization has resulted in the decline in capacity utilization to around 20 percent with over 100 factories closed while some existing factories are in distressed conditions and very few in a little stable condition.
For Paul Olarewaju, director general, Nigeria Textile Manufacturers Association (NTMA), there has been a general distress in the country’s manufacturing sector but that of textile industry is very much pronounced because it had always been a major player in the manufacturing sector of the economy as it currently face the problems of infrastructural decay, inconsistent government policies, multiple taxation, high cost of doing business.
The government intervention loan intended to change the face of the prostrate textile sector was meant as soft loan to stakeholders to boost their production capacity. Out of the N70- billion, N20bn was supposedly earmarked for cotton farmers, while N50 bn was for textile manufacturers.
But, the fund which was approved by former president Olusegun Obasanjo’s administeration has since over two years not been disbursed as a result of government’s delay in signing the guarantee for the N70 billion textile sector bail out loan from the United Bank of Africa (UBA), even as both the employers and workers in the industry have raised alarm that only government immediate intervention can save the sector from imminent collapse.
Textile industry assistant general manager, Credit Appraisal, Nigeria Export Import Bank (NEXIM), Jeremiah Abba, earlier disclosed to journalists in Abuja that government has done every other thing concerning the release of the fund which he said is a loan that will attract 9 per cent interest rate for equipment renewal and working capital.
According to him, government has also through the Central Bank of Nigeria (CBN), Security and Exchange Commission (SEC) and Corporate Affairs Commission (CAC) granted several weavers, stressing that all equipment to be imported under the N70 billion revival programme would be tax free.
He noted that NEXIM which the Federal Executive Council (FEC) mandated to source for the fund from UBA in May 2014 has raised the fund and president Yar’ Adua’s government reconfirmed and has given approval to the fund early last year.
“NEXIM team had visited not less than 66 textile companies across the country and that the fund is 99 per cent ready. What is remaining is for the Federal Government to sign the guarantee for the loan before it can be released for disbursement.”
Commenting on what appeared to be a struggle between NEXIM and Bank of Industry (BOI) over the disbursement of the fund, Abba, said that FEC has mandated NEXIM to disburse the fund and would manage and ensure the recovery of the loan.
He explained that the process for disbursement of the fund is so rigorous and that all necessary documents have been sent to the appropriate ministries for action.
Analysts say, the idea of N70-billion to revive the textile industry was commendable, but, observed that the problems of the industry has gone beyond money because, when the basic infrastructure such as regular power supply are not there to boost production, the money may still be invested in the sector and be spent on infrastructure which should have been provided by government.
The textile industry had seriously been threatened in the past years, by inadequate funding, invasion of local markets with foreign textiles and cotton products, high cost of production occasioned by epileptic power supply and high cost of Low Pour Fuel Oil (LPFO) that textile factories use for steam generation.
Ashok Das, managing director, Stallion Textile Industries Limited one of the existing textile industries in the country confirmed this when he stated “Our capacity is about 120 metric tons per month, but, we don’t often realize that because of power and other logistics problems. Currently, our capacity is put at between 90-95 metric tons because of loss of production.”
The sector in the past was the largest employer of labour after government as it employed over one million Nigerians and secured captive market of 250,000 tons of raw cotton for growers and generates over N1 billion revenue to federal government of Nigeria. It was also a major consumer of high percentage of local raw materials such as cotton and polyester.
What happened in tyre manufacturing when there was total shutdown of Michelin tyre operations in Nigeria with the consequent retrenchment of more than 1,200 employees and the recent closure of tyre production by Dunlop Nigeria Plc, in less than two years, is another warning signal that Nigeria’s operating environment is still very hostile to the manufacturing sector.
The textile sector which is most hit by mass factory closure and loss of jobs has in the last two years been faced with more than half of the remaining less than 40 mills’ imminent shut down.
With a low score card over the years, last year inclusive, stakeholders in the industrial sector believe that the prevailing realities in the country and beyond point to yet another appalling performance this year.
They, however, described the poor prospects of the sector as redeemable if certain steps are taken by the federal government.
These, they said, included addressing the declining value of the naira, tackling port congestion and taking necessary measures in view of the global financial crisis. They also canvassed an effective and hastened implementation of the N70 billion textile industry revival fund, ensure that the nation’s borders are well guided against smuggling and improved power supply.
The president, Manufacturers Association of Nigeria (MAN), Bashir Borodo urged the federal government to jumpstart the implementation of the N7- billion textile industry revival fund.
He also urged government to pursue the implementation of its plan to improve power supply.
According to him, “Government should sort out the financing of the national independent power plants. It is gratifying that the state governments have agreed to support the initiative. So the federal government should provide the required funds.”
Significantly too, the MAN president has a task for the recently appointed Commerce and Industry Minister, Achike Odenwa, saying, “The new industry minister should use his good office to get some other ministers to champion the cause of the industrial sector.
For instance, the Federal Ministry of Commerce and Industry does not control the exchange rate. Neither does it determine the tariff structure.
So, the minister should use his experience to ensure the support of relevant ministries so as to reposition the industrial sector.”
The problem of inconsistency in government policies is one basic issue that needs to be resolved, especially policies concerning the textile industry. The problem of the industry has gone beyond money.
