‘Why government should review textile industry’s revival strategy’

$4b yearly spending on readymade clothing, others not sustainable

Worried about the yearly expenditure of $4 billion on imported textiles and readymade clothing, manufacturers in the nation’s textile industry have tasked the Federal Government to review the strategies deployed in reviving the sector in order to avoid recurring failed results.

Specifically, the manufacturers noted that while the nation represents a large market for textiles, spending over $4 billion yearly on imported clothing is not sustainable and undermines the local industry, while draining existing foreign reserves.

Indeed, some of the revival strategies to be reviewed border on intervention programmes initiated by the Federal Government still awaiting implementation.The manufacturers, under the aegis of Nigerian Textile Manufacturers Association (NTMA), noted that despite government’s intention to revive the sector, the reality on ground continues to be worrisome.

According to the Director-General of NTMA, Hamma Kwajaffa, the influx of smuggled goods to major textile markets in Kantin Kwari in Kano, Balogun and Oshodi, Lagos, not only undermines the local industry, steal jobs, and deprive government of revenue, but serves as a drain on Nigeria’s foreign exchange reserves.

The manufacturers noted that the prevailing unprecedented harsh environment has no doubt dealt a serious blow to the already fragile industry, adding 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.

“Most of these issues for which government intervention was sought are within the ambit of existing policy framework whereas some require new initiatives. They include the re-scheduling of the CTG loan facility by the Bank of Industry to 10+2 years, which was agreed by the government. For this to be effective, a notification is still awaited

“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 three 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, while 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,” the manufacturers added.

Furthermore, the manufacturers urged government to address the huge backlog of unutilised EEG-NDDC (Negotiable duty credit certificates)- a sovereign instrument issued under the seal of the Federal government, adding that the NTMA had suggested the redemption of NDCC’s in lieu of BOI loan installment owed by the textile companies

On local patronage, they noted that the need for import substitution has never been felt stronger before, therefore urging government to persuade its MDAs to source all their uniforms from the local textile mills, while 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.

Former Director General of NTMA, Jaiyeola Olarewaju, said:”The benefits from a competitive textile industry in Nigeria are numerous. First of all is the recurring saving of foreign exchange to the tune of $ 4 billion a year on account of import substitution.

“Increase in capacity utilisation will quadruple direct employment from the current level of 24,000 persons in 5 to 7 years. Greater demand for cotton will boost the income of Nigerian farmers. The government needs to walk the talk and fulfill the assurances given to the sector.”