Nigeria’s Textile Industry on the Brink of Collapse Amid Import Surge and Policy Failures

M10news – Nigeria’s textile industry is now gasping for breath following the failure of revival measures, a sustained upsurge in the Importation of textile products, and a series of adverse monetary policy regimes.

Once a thriving sector, the textile industry’s decline has been marked by numerous challenges despite government efforts to rejuvenate it.

Recall that Nigeria had a rich history of robust textile manufacturing with a large domestic market and exports to the West Africa sub-region between the 1970s and 1990s, recording the highest contribution to Nigeria’s Gross Domestic Product (GDP) and employment in the manufacturing sector.

The sector recorded about 180 textile mills employing over one million direct labourers at its peak around 1990. It also supported massive backward integration with the cotton production value chain.

However, Financial Vanguard findings indicated that decline had set in around 2005, and it had struggled since then despite the growing market size due to the rising population.

Financial Vanguard also learned that only about five textile mills are operational today while the cotton production value chain has vanished. The labour force is also down to less than 2,000, both direct and indirect.

Industry stakeholders have attributed the collapse to challenges including large-scale smuggling and Importation, little or no power supply to the industry that is power-intensive, inconsistent government policies on tariff, insecurity across cotton production regions, and foreign exchange crises and high cost of funding, which made the products uncompetitive in the face of massive imports.

Despite the federal government’s efforts to revive local production through protection policies, the country’s textile industry has struggled, leading to an upsurge in textile imports.

As part of the revival measures, the Central Bank of Nigeria (CBN) has implemented various intervention programs, including financial support, training initiatives, and foreign exchange restrictions on textile imports at the official exchange market. However, none of these have yielded the required boost in the sector.

Data from the National Bureau of Statistics (NBS) from 2019 to 2023 revealed a steady rise in textile imports.

Total textile trade within the period was N1.5 trillion, with imports totalling N1.4 trillion, representing 96.5 per cent. Exports amounted to N50.7 billion (3.5 per cent), indicating a total textile trade deficit of N1.384 trillion and highlighting a significant reliance on imported textile products.

Findings by Financial Vanguard show a massive Chinese infiltration into the Nigerian textile ecosystem, with the Importation of adulterated Adire (locally made tie and dye) fabrics, also known as “Adire Chinese”. The counterfeit Adire products in China have become an attractive option because they are cheaper. Folakemi (not real name), a customer in the market to buy Adire as “Aso Ebi”, said she was forced to go for the Chinese option because of the cheaper price, even though the quality is not the same as the original. “It is not expensive. The ‘Adire Chinese’ costs N3,300, half the price of the locally produced fabric. Hence, I had to go for it,” she said.

Meanwhile, the Ogun State government said it has initiated moves to tackle the menace of imported adulterated Adire fabrics, which pose a significant threat to the local Adire industry.

The State Commissioner for Culture and Tourism, Sesan Fagbayi, disclosed this at an Adire exhibition in Lagos. He said: “The State House of Assembly has commenced steps to curb the excesses or inflow of Chinese adulterated fabric.

We are also taking it up with the National Assembly; the Representative of Abeokuta South Federal Constituency has also raised a Bill at the National Assembly that has passed its second reading. By the time that is done, we will probably have the backing of the federal government to ban this adulterated fabric outright.”

The Manufacturers Association of Nigeria (MAN) has faulted the continuous adoption of tight monetary policy by the Central Bank of Nigeria (CBN), saying it reduces the competitive capacity of Nigerian products in the global market.

Commenting, the Director General of MAN, Segun Ajayi-Kadir, said: “The manufacturing export value of Nigeria declined by 166 per cent to N778.44 billion in 2023 from N2.07 trillion in 2019. And the excessive lending rate has also resulted in a 57.6 per cent drop in the share of manufacturing export to non-oil export to 24.8 per cent in 2023 from 82.4 per cent in 2019.”

As a way out, Ajayi-Kadir called for enforcing Executive Order 003. He said: “Importation is presently discouraging local production, putting a strain on foreign reserves, and weakening the economy. Structural constraints should be addressed to reduce the cost of local production, which remains significantly high.

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” signed Executive Orders 003 and 005 that seek to promote improved patronage and local content.”

In the meantime, the Federal Government has commenced moves aimed at revamping Nigeria’s cotton, textile, and apparel industry in collaboration with development partners and the private sector.

Minister of Industry, Trade, and Investment Doris Uzoka-Anite disclosed this at two recent events. While reviewing the ministry’s activities last year, she said that about $3.5 billion in investments were secured within the period to rejuvenate the moribund sector.

Sola Adeniji

News Reporter, Freelancer, and content creator

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