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The N300 billion textile revival fund

By Editorial Board
20 September 2022   |   3:32 am
The controversies surrounding the effectiveness of the various funds for the revival of the country’s textile industry are not new, having been raging for some time.

The controversies surrounding the effectiveness of the various funds for the revival of the country’s textile industry are not new, having been raging for some time. Right from the administration of General Ibrahim Babangida when the first real effort to rehabilitate the sector was made with the establishment of a N100 billion Cotton, Textile and Garment Revival Fund, lots of challenges still persist in the sector. These include issues such as the high incidence of smuggling, protracted import culture in the country and the often conflicting policies of government. As has been muted in various circles, these challenges will invariably continue unabated except the country successfully transits from its current consumption-oriented economy to that of production.

The protracted import orientation in the country has led to an unhealthy taste for foreign textile and garment wears, usually displayed at public events – at work, at school and at play which has deprived local textile firms of the much needed patronage to enhance their contribution to the country’s gross domestic product. This orientation very much needs to change. A clear case of where some semblance of change is taking place is in Anambra State where the Governor, Charles Soludo, a globally-acclaimed economist and former governor of the Central Bank of Nigeria (CBN) publicly announced that his policy as state governor is to adorn the Akwete dress and other locally made fabrics in other to encourage local production and demand for the local goods. Hence the display of a strong political will such as this is clearly a key requirement for the overcoming of some of these challenges confronting the textile subsector of manufacturing in the country.

Very few of the textile firms in Nigeria are still in operation. In the Lagos area, those still around and struggling include Spintex Mills Nigeria Limited, Lucky Fibres Plc and Nichemtex Plc. Major textile firms across the country such as the Nigerian Textile Mills, Aba Textile Mills, Asaba Textile Mills, Kaduna Textile Limited and a host of others have either gone extinct or are now moribund. This is a very sad commentary on the country’s textile industry which was globally recognised a few decades ago when it was the third largest in Africa only behind Egypt and South Africa in the days of boom, in terms of turnover and other related economic indicators. Then, it also represented about a quarter of total employment in the manufacturing sector and was second only to the civil service in employment in the country.

However, the overwhelming dependence on the oil sector and the concomitant cheap oil revenue to government has diverted attention away from the textile subsector which has led to the gradual decay of textile production in the country. These have been exacerbated by the increasing influx of cheaper textile fabrics from China and India, among others sold at prices way below the cost or even the factory-gate prices of local firms. Under the Goodluck Jonathan administration, efforts were made to address the issues by placing a ban on importation of textile fabrics, but like other trade restrictive policies, these failed to yield the desired results. These issues are what the various Federal Government multibillion naira textile revival funds are meant to address. Despite the establishment of various revival funds over time in the region of about N300 billion, not much progress have been recorded in the revival of ailing textile companies.

The funds made available to rescue the textile industry have recorded some little progress with much of the effects being negative. On the positive side, according to Issa Aremu, the former Vice President of the Nigerian Labour Congress and General Secretary of the National Union of Textile Garment and Tailoring Workers of Nigeria, over 38 firms had benefitted from the funds with over 8,000 jobs saved. However, contrariwise, the decay in the subsector appeared to have been increasing in spite of the release of funds by the federal agencies such as the CBN and the Bank of Industry (BOI). In 2020, for example, the CBN announced a N50 billion special mechanism fund for the revival of ailing firms in the textile industry under the administration of BOI at a concessionary rate of 4.5 per cent, yet this has not brought any reprieve to the subsector, as expected. With about 60 per cent of the funds already disbursed, according to the BOI, the indications are that the more the funds are released to the sub sector, the more the textile and garment sector died. Something is definitely wrong somewhere. Though the Federal Government says it will work on reviving the remaining moribund textile companies in the country, throwing money at problems does not necessarily solve them. The problems of the textile and garment industry go beyond the provision of funds. Issues of corruption as well as effective implementation need to be investigated.

Presently, with government statistics that only seven textile companies are functioning below maximum capacity compared to what obtained in the past, a lot needs to be done to salvage the situation. First, there is the need for a strong political will to address the challenges of the subsector. This includes formulation of policies that will promote the use of Made-in-Nigeria textiles and garments at all occasions as is being currently promoted in Anambra State under the leadership of Charles Soludo. The other issue is the addressing of the market access challenges of the local firms. Hence the use of tariffs to checkmate the influx of cheap textiles from China and India among others needs to be revisited. The provision of infrastructure, particularly energy supply is a sine qua non for the growth of the textile and garment subsector. Other issues relating the macroeconomic policy environment such as exchange rate and price stability issues also need to be addressed in enhancing the revival of the subsector. This should be in addition to the provision of security which is currently a matter of great national concern. Currently, the Nigerian textile subsector of manufacturing is unable to produce textile product at globally competitive prices. Though the need for more funds in the revival of the subsector should not be underplayed, a more holistic approach needs to be taken to address the need of local textile goods production in the country.