#CSRFW: Advancing Nigeria’s textile industry: a Strategic Approach to Sustainable Industrialisation.

Various conjectures and opinions have arisen following the recent announcement by the Central Bank of Nigeria (CBN) on its intention to ban the flow of foreign exchange to textile importers. The reason given for this decision is to “help bolster the local textile industry.” This is coming in the wake of the federal government’s efforts to stimulate the textile industry through the National Cotton, Textile and Garment Enterprise Policy launched in 2015.

At some point in the country’s economic history, Nigeria could boast of a viable textile industry that was once one of the nation’s largest employers of labour and a major contributor to its gross domestic products (GDP). However, over the years, the sector has become comatose. According to a United Nations University report, Nigeria’s textile industry was the third largest in Africa after Egypt and South Africa, accounting for about 25% of manufacturing value added, 25% of the total manufacturing employment, and went through different growth spurts averaging 12% in the 1970s during the nation’s economic boom.

With the recession of the mid 1980s, cumulative textile production index witnessed a decline from 427.1 in 1982 to 171.1 in 1984. This trend quickly took a turn for the better with a quick recovery in the late 1980s when the industry achieved an annual growth of about 67% between 1985 and 1991. Synthetic textiles accounted for 80% of the recorded growth. Within this period, capacity utilisation also improved because of strict government directives, resulting in a 64% level of locally sourced raw materials as at 1991, an improvement from 1987 and 1988 with 52% and 57% respectively.

The textile industry at the time provided a level playing field for private-sector firms who controlled the industry with considerable foreign investors from Hong Kong, India, the UK, Liechtenstein, the Netherlands, the United States, Japan and Columbia.

In spite of all these apparent achievements, the sector has never been able to exceed an output of 55% of its annual domestic consumption, which has paved the way for a lucrative importing trade of mostly smuggled textiles. No doubt the sector had a promising inception, and may very well have been on its way to grow the nation’s economy. This may have informed the initiation of the 2015 policy with the hopes of an overhaul of the textile industry.

However, four years down the line, the federal government believes that the national policy on Cotton, Textile and Garment (CTG) has been unable to meet set targets, hence the CBN ban on textile importers. Nigeria’s textile industry and by extension, the apparel and footwear market, is estimated to be worth about $4.7 billion of the total $31 billion credited to the whole of Sub-Saharan Africa. Local fashion brands are now becoming regular features in international fashion events; they are tapping into the global market force and increasing the level of professionalism in the industry that has been attributed to its success. The fact that the local textile industry plays a key role in the country’s industrialisation suggests that a strategic approach to industrialisation needs to be taken.

From the foregoing, a lot of factors would come into play if the industry is to be restored to its former state (or at least come close to it).











Lessons from China

China is accredited with being one of the major influencers in the global textile industry and presumably one of the largest manufacturers and exporters of textiles in the world. In 2015, China’s export value for textiles alone stood at $11.53 billion. The textile industry in China has different sub-sectors that drive the overall textile and apparel industry in the country. They include: apparel, industrial base, home textiles, knitting, cotton, fibre, non-woven products, hemp textile, wool textile, and silk.

The country’s national economy benefits significantly from the returns the industry delivers as textile products are an integral part of China’s foreign trade. In 2015, the production value of the industry accounted for 7% of the country’s GDP while the processing capacity and value of exports of textile fibre are the highest proportion than anywhere in the world. China’s textile industry has an output volume that accounts for more than half of the world’s capacity, and its market international share is more than one third of the global markets.

Over the years, the textile industry in China has thrived because it has taken advantage of all existing components in the textile industry value chain. The industry has exploited the different materials that are got from textiles, which include fiber, filament, yarn or thread, etc. and manufactures a variety of products ranging from leather jackets, to cotton dresses, and even extending to products like glass tiles, roofing shingles, and seat belts. Subsequently, the industry has evolved to accommodate different manufacturing processes to produce the wide variety of products  from textiles. From harvesting of plants, to tending cattle and the development of technology used in creating synthetic thread, these all contribute to making the textile industry a thriving and viable industry that not only generates massive income for Chinese nationals, but also provides millions of jobs that transcend the shores of China.

For Nigeria to enjoy the growth potentials that the local textile industry has to offer for the country, it is crucial for all players involved to maximise the opportunities the industry presents. Like China, the capacity of the domestic industries that drive the textile industry as a whole need to be strengthened. Beyond banning the flow of foreign exchange to textile importers, the central government working with key private stakeholders in the industry should provide favourable economic conditions to support the various sub-sectors in the industry. One of the ways this can be achieved is by setting up key infrastructure that can support growth in the production capacity of textile products. To achieve this, there should be considerations to work with global brands, especially European companies who are looking to Africa to source for garments. Local fashion brands can take advantage of these opportunities for collaborations with foreign apparel, clothing and footwear markets, which will provide avenues to compete favourably with China, and even the US markets.

Source: CSRFilesDigest in association with ThistlePraxis Consulting

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