Nigeria's cotton and textile industry was in the 80's a key player in the national economy particularly in the provision of livelihood for about 20 percent of the population with 600,000 work force operating close to 170 textile mills across the country.

The industry then generated an annual turnover of $8.95 billion; an average of 25% of the sector's gross domestic product (GDP) which accounted for not less than 10% of corporate income taxes.

Figures obtained from the Manufacturers Association of Nigeria (MAN) shows that 1.3 million cotton growers in the country's cotton production belt, if factored into their dependency ratio of 1:8 worker per dependant, then it is obvious that 17.2 million Nigerians derive their livelihood from the industry.

Nigeria was ranked the second largest textile hub in Sub-Saharan Africa queuing behind South Africa. She represented 63 percent of the textile capacity in the West African sub-region before the neglect and policy inconsistencies that capsized the sector.

Figures showed that the number of textile and garment factories after the storm, fell from 175 in the mid 1990's to less than 25 in 2010 while employment dropped from 137,000 in the 1990's to 60,000 in 2002 and further to 24,000 in 2010.

As a consequence, this led to the decline in cotton lint production from 98,000 in 2006 to 55,000 tons in 2010 and export of cotton went down from $44 million to $31 million within the same period.

Records further indicated that capacity utilisation in the industry dwarfed to 20.14 percent in 2010 from 50.75 percent in 2003 while many surviving ones are close to extinction.

Activities Of Smugglers

A cursory look at the development of textile industries in developing Asian countries show that smuggled textile materials into Nigeria currently put at 85% is thriving and contributing immensely to their economy.

For instance, in India, the textile industry is the only industry that has generated huge employment for both skilled and unskilled labour.

It has continued to be the second largest employment generating sector in that country offering direct employment to over 35 million people.

According to the India's Textile ministry, the sector contributes about 14 percent to industrial production, four percent to the country's gross domestic product (GDP) and 17 percent to the country's export earnings.

The share of textiles in total exports was 11.04% in 2010 and it was estimated that India would increase its textile and apparel share in the world trade to eight percent from the current level of 4.5% and reach $80 billion by 2020.

However, an array of hope is in the horizon with federal government's N100b bond-funded cotton textiles and garment industry (CTG) revival scheme.

Turnaround in sight

Even though there had been scepticism over the implementation of the intervention fund, industry watchers still believe that a turn-around is imminent.

The recent validation workshop on the mid-term evaluation of Nigeria's Cotton, Textile and Garment (CTG) Industry in Abuja afforded a unique opportunity to appraise the nation's comatose but once vibrant cotton, textile and garment industry.

At the workshop stakeholders submitted that the problems of the industry, to a large extent, was due to obsolete equipment, unbridled importation that allows for the dumping of highly subsidised alternatives into the Nigerian market and smuggling and counterfeiting of Nigerian textile products and absence of long-term and low interest fund as well as dearth of technical manpower.

According to Jaiyeola Olarenwaju, Director General of the Nigerian Textile Manufacturers Association (NTMA), government's lack of consistent policy direction, lack of protection of nascent home industry due to globalisation and liberalisation policies, high interest rate among others contributed to the sharp decline of activities in the sector.

He also agreed that the misfortunes of the sector dated as far back as 1985, resulting in unprecedented job, investment and revenue losses, occasioned by massive influx of cheap products into the country, changing consumer tastes and habits, and poor infrastructure, among others.

However, the industry is expected to begin to experience a turn-around considering the huge hope offered by the Bank of Industry's (BOI) intervention fund and the renewed commitment of the bank to execute the mandate of the government's intervention initiative.

N100bn Intervention Fund

The N100 billion intervention fund to revitalise the CTG industry, which was domiciled with BOI in 2009 is now being disbursed with a total of N7.195 billion already disbursed to three firms.

As at June 2012, a total of N41.1 billion had been disbursed to 56 successful applicants by BOI. Indeed, stakeholders at the workshop showered encomiums on BOI for the present revival efforts in the sector, which they said indicated that brighter days are just months-if not weeks- away.

The Minister of Trade and Investment, Mr Olusegun Aganga, noted at the workshop noted that the CTG sector was leading in the economy from the 1960s through to the 1970s and in the early 1980s when the industry had about 175 textile mills and employed over 600,000 workers, making it the second largest employer of labour next to government.

"Unfortunately however, by 2008, the textile factories still in operation had reduced to 24 textile mills and 10 ginneries employing less than 25,000 people and with exports less than $50million", Aganga lamented.

He identified some of the factors that led to the decline in the sector to include massive influx of textiles and apparels from Asia, particularly after the Multi Fibre Agreement (MFA) expired in 2005, inadequate and epileptic energy supply and heavy reliance on self-generation of power, leading to high and uncompetitive production costs. Others, he added, were global economic challenges, massive smuggling of cheaper textiles with lower quality, changing consumer tastes and habits and huge debt burden on producers in the value chain amongst others.

Growth Potentials

The minister noted that the sector holds strong potential due to its natural cotton endowments, large market size and legacy sector knowledge, adding that Nigeria's population of over 167 million people represents a natural market for basic textiles and apparel related goods.

He stated further that the potential to export to regional and select developed markets (such as the United States under the African growth and opportunity Act (AGOA) tariff regime) are also very attractive, just as the existing textile infrastructure and skill base provides the industry with a pool of knowledgeable workforce particularly in Northern Nigeria. These realities, the minister emphasized, make the sector too important for the government to ignore.

Hence, in 2010, he continued, the Federal Government introduced a N100 billion Cotton, Textile and Garment Revival Scheme, managed by BOI to reverse the ugly trend and ensure a rapid resuscitation and upgrading of the entire CTG value-chain.

Agagu disclosed to the appreciation of stakeholders that, "Two years down the line, we are pleased to inform you that substantial portion of the fund has been successfully disbursed to beneficiaries and the impact is very encouraging. Recent figures from the Manufacturer's Association of Nigeria (MAN) reveal that the capacity utilisation in this sector has increased tremendously from 29.14 in 2010 to 49.70% as at 2011. In addition, a number of hitherto moribund textile mills have been reopened and about 8,070 jobs have been saved while over 5,000 new jobs have been created.

He added that, "The evaluation of the socio-economic impact of the fund to the beneficiaries and the national economy at large could therefore, not have come at a better time.

Although, it is evident that the CTG Revival Fund Scheme has provided the industry players with a unique source of incentive-based long term fund for the financing and refinancing of capital investments and revolving working capital. "Based on my interactions with some of you and my findings during my visits to your factories, I am not unaware of other challenges being faced by you".

Measures against dumping

Aganga assured the stakeholders, "We are working through the Standards Organisation of Nigeria (SON) to reduce the dumping of sub-standard goods into the country. Some of these goods include textiles and apparels. We are also exploring diplomatic channels through our Trade Ambassador at the World Trade Organisation (WTO). To ensure increase in power supply, we are working with the Ministry of Power to ensure that 10 industrial cities in the country have at least 18 hours of uninterrupted power supply by first quarter of next year (2013)".

He stated further that "Our aspiration for the textile and apparel industry is to increase its domestic market share from its present position of 12 per cent to 25 per cent by 2020. We also expect this sector to create over 60,000 direct jobs within this period. To achieve this, the strategic thrust requires reviving the entire value chain.

This includes strengthening the base by boosting cotton production for use in the domestic sector and potential exports, supporting existing players to expand their current operations and attracting strong brands to set up local manufacturing operation in the country. This explains why we have included the sector in the Industrial Revolution Plan which is being put together by my ministry".

The minister was optimistic that the outcome of the workshop would significantly enhance the implementation of the scheme and provide a guide on areas requiring urgent attention by the Federal Government to incorporate in the Industrial Revolution Plan.

BOI Perspective

Also speaking at the forum, BOI's Managing Director, Ms Evelyn Oputu, reiterated the bank's commitment to the rehabilitation of ailing and moribund industrial firms, including textile, automotive and others, which have significant capacity for employment generation and export. She disclosed that more approval and disbursement of the fund would be done to successful applicants in 2013, adding that the fund could even be fully disbursed then.

Justifying the workshop, the BOI boss explained that, having implemented the scheme for two years, the need for an independent mid-term evaluation on the performance of the bank and beneficiaries cannot be overemphasized. This, she added, would enable stakeholders to ascertain whether the scheme achieved intended objectives, so as to recommend to BOI and other stakeholders on how to improve its efficiency and effectiveness.

Oputu also stated that, "Our desire is to save and create jobs in the CTG industry, protect the $2 billion investment in the industry, increase the profitability of beneficiaries of the fund and strengthen the synergy between CTG sub-sectors".

Commending the bank, the Chairman, Adhama Textile and Garment Industry Limited, Sa'idu Dattijo Adhama, said BOI and The United Nations Industrial Development Organisation (UNIDO) have both done a very good job. According to him "UNIDO did well in its research, really hearing our views as individual firms, and our collective views as well. And BOI has been very thorough and professional in the disbursement of the fund to beneficiaries. We are very happy with the scheme, and we are here to evaluate it for necessary improvement to the benefit of all stakeholders".

Looking Forward

Also, the Vice President, Nigeria Labour Congress (NLC), Mr Issa Aremu, said "BOI is doing a very good job". Aremu canvassed increased funding of BOI, specifically asking that the CTG intervention fund should be increased to N1 trillion.

According to him, if banks that are rendering services and who altogether are less than 30 could benefit to the tune of trillions of naira from the Central Bank of Nigeria, why won't over 120 textile, cotton and garment firms who can employ tens of thousands of Nigerians also enjoy funding in trillions.

He argued that the interest rate is still high at six per cent, canvassing zero per cent, a position that was applauded by industry operators. If the statements coming from government that it wants to diversify its non-oil sector is to be taking seriously, then it should make efforts to fast track and increase the number of beneficiaries of the intervention fund, create more jobs in the sector thereby raising its textile industry contribution the GDP of the economy. each link to view)