Hamma: Border closure is good for textile industry, but we have other challenges
• Electricity Tariff In South Africa, Egypt And Kenya Is Lower Than Ours
• On AfCFTA, We Cannot Even Compete In West Africa
The Director-General of Nigerian Textile Manufacturers Association and Nigerian Textile Garments and Tailoring Employers Association Kwajaffa Hamma spoke to DEBO OLADIMEJI on the border closure and how it has affected the textile industry.
There are various reasons that the government has advanced for closing the borders, which of these strikes you as important enough to warrant such swift action?
The swiftness with which the government closed the borders is not a surprise to anybody at all, because you can see they have almost every security apparatus stationed at the borders. It is not only the Customs that is involved in the current exercise. They have to involve the Armed Forces, Police and Civil Defence. They are all there to ensure that there is no circumvention of border closure.
I think it is good for us to know certain things. In the past so many things just come into the country. It is just because of our penchant for anything foreign. From the look of things, we must patronise locally made goods.
We should take a cue from what has happened in the textile sector. They empowered the manufacturers and then there is no outlet. They empowered them with all sorts of loans from the Bank of Industry amounting to N100b and nothing comes out of it. It is true that textile companies are producing but there is no market because smugglers have taken over. So, the border closure is good for the industry, so that we have to look inwards and produce what we need.
The government should look into the situation with the ports. I think ports in Benin Republic are cheaper. People prefer to clear their goods, especially vehicles in Benin Republic and then transport by road to Nigeria. All these things we have to check, because our Customs alone cannot do it. The government also needs to re-orientate their officials because corruption is endemic among Custom officials. So, now if our Customs is making N5b daily with the closure of the border, it means they are now using our ports. Instead of Benin Republic deriving the revenues, Nigeria is now earning from vehicles cleared at Apapa Ports. I don’t see border closure as very bad solution. So many things have to be put in place before they re-open the borders.
In What specific ways does the closure affect local manufacturers who export to the Economic Community of West African States (ECOWAS)?
The ECOWAS Trade Liberalisation Scheme (ETLS) and the Common External Tariff (CET), which we signed, are more beneficial to the Francophone countries than to us. Because what we are saying in the agreements is that member-countries must manufacture. But our Francophone neighbours buy (import) products and then come and sell again in other West African countries. We are looking at what will benefit manufacturers not traders. I like what the government is doing to patronize made-in-Nigeria textile. That all uniform men must buy from the textile industries. Of course, we have the market locally. Why must we be going out to look for market when we have it locally? Government now has to source for materials for National Youth Service Corps (NYSC) uniforms locally. They need more than 300 thousand pairs of uniforms quarterly, and before they used to import from China.
If government can continue to look inwards and buy from local textile manufacturers, that will revive the textile industry. We were close to shutting down the industry because we are not competitive. Electricity is out biggest problem, power is always fluctuating; electricity constitutes up to 27 per cent of the requirement of the textile industry.
Now, we in this sector cannot export our products because of overhead cost. So what are we exporting when we cannot go there and compete at the price others are offering? We are no peer to South Africa, Egypt and Kenya, where their electricity tariff is lower than ours. They can export and be competitive. If we go out there, our prices will be higher, because we want to meet up with overheard cost. In some West African countries that we sell power to, they sell less than we do.
We cannot even compete in West African sub-region, because the market is open to other developed countries and they bring their goods from international market. Franchophone countries have trade agreements with France. Nigeria is the only country that is left out. It is just now that we are signing the African Continental Free Trade Agreement AfCFTA.
But is the border closure not a negation to the ACFTA?
It is not a negation of it. It is not totally signed yet. We are still looking at the nitty-gritty, so that we don’t become a dumping ground. If Ethiopia is selling electricity at 4cent per kilowatt, Nigeria is selling at more than 53 cents per kilowatt. Are we competitive with them? It means their goods will be cheaper. They will just flood our market. All these things the government has to look at and come out with a solution. What we have now is a partial signing of ACFTA; it is not fully signed up yet.
Are you saying government did not take these into consideration before signing the agreement?
These are some of the things we are talking about. The late Gen. Sani Abacha signed the World Trade Organisation (WTO) agreement without consulting with the people in the industry. That was the military, but now we have to look at things constitutionally. The textile sector was next to the government in terms of providing employment. We had about 250,000 workers with about 167 textile companies in the late 80s. Later, the ban on textile compelled all fabrics coming to Nigeria pay 10 percent as textile development levy. It was meant to cushion the harsh effect of poor infrastructure, to enable us develop and be competitive. If 4billion dollar worth was derived as import duties on fabric, the 10 percent was supposed to be given to textile for development.
We have never seen that type of money. It has not been given to us. If it was actually meant for textile development, it is supposed to be kept in a bank where we can access it free of interest rate. The fund was to enable us buy electricity at a competitive rate and cushion the effect of overhead so that we can compete. But government has not implemented that policy.
In a globalized system, we are not competitive at all. But anything coming from China receives incentive from their government. Chinese infrastructure is good. They are on nuclear power. So how can we be competitive? You don’t need be told what our electricity is. Sometimes it cannot even carry a refrigerator. Sometimes they supply only eight hours in a day, so the remaining hours you have to depend on yourself. But if you have to run three shifts you got to have 24 hours of electricity. In China they can work throughout because they are on nuclear power. Now we have to downsize to meet our demand; we cannot sell outside, we cannot sell locally. We are not competitive anywhere.
If we are competitive even locally, we would be happy, but the overheard cost is just too high. How can South Africa generate 55,000 megawatts of electricity and we are in the same continent. And they are the ones that enacted the ACFTA, because they are ready for competition, and we are not. The 5,000 on top of their 55,000 megawatts we don’t even have. Certainly, the border closure is affecting local manufacturers, but we have to look at it overall and weigh it. Which is more beneficial? It is a sacrifice and it is for a short term.
Many Nigerian traders dealing in perishable food items, including tomatoes and poultry products are lamenting the closure. What do you make of this?
You know farming is annual and the farmer’s life depends on it. Many countries are now depending on irrigation. You don’t have to depend on rainfall alone. But our government does not plan for these things. People have to be engaged throughout the year to be able to make good money. We have to look inwards and build our people. Look at the way they are now closing our traders’ shops all over in Ghana. In the past we were used to Ghana must go. This time they are challenging us. We need to build ourselves and be able to be independent as much as possible. If you don’t develop home, how can they come home? It is because the infrastructure is not available locally for them to come back. All these countries we were helping them before, they didn’t have money. Where we okay before we helped others? Now we have to look at our home first before we help anybody.
As long as we don’t develop ourselves, as long as we are not at par with other countries we will be disadvantaged. That is why we need to look inwards and see those we can compete with. When we go on exhibition, we sell our garment at one dollar, people in Madagascar, a small country, will sell at 50 cents. As small as they are, they have infrastructure in place. Although we have quality made-in-Nigeria goods, we cannot compete with other countries because those people are getting their infrastructure cheaper.
Many countries are building industrial hubs where they are able to supply 24 hours of electricity. We are not getting that. We are left like that. So people have to look at these things and compare and tell us whether we are really competitive or not.
Why are ports cheaper in Republic of Benin than our own ports? The port is cheaper, that is why our people are patronizing Benin border, Benin port. Usually, we have no barrier with the Common External Tariff we have with our ECOWAS neighbours. There are some tariffs, which you have to pay before you bring in your goods. This is being contravened by Customs and that is why it is not working. There must be computers in place to check imports. Some will say they import cement, but when you go you will see sand. We must have electronics that can check all these things and check what is in the container. We must develop our economy first and then trade with others at competitive prices. It is then we will know we are in trade. But when you don’t put your house in order you cannot compete.
In agriculture, we should have storage facilities in place for our perishable items. You don’t just allow the farm produce to waste like that. In developed countries they have storage facilities for their farm produce. That is why fruits are available throughout the year. We must have storage facilities for our farm produce to last for a long time. It will prevent our farmers from losing money.
Some southern businessmen allege that border closure is biting more in the south than north. Do you agree?
Some of these things are social media topics that people just talk about, without substance. Maradi border is closed. As I am talking to you, there are a lot of textiles that are just held there. And they are trying to get money to bring those goods back to Nigeria. And they are finding it difficult now because the border is officially closed. It is not only Seme border that is closed. Maradi border, between Niger and Nigeria is closed. I have confirmed that Maradi border is closed and the security agents are not allowing trucks loaded with textiles to come into the country.
Is the January 2020 date for reopening okay by you?
Government should be able to study the situation. If government thinks it is okay, fine.
No comments yet