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Nigerian textile import hits around N1.32 yearly

YarnsandFibers News Bureau 2016-08-26 14:00:00 – Africa

Nigeria has the potential to produce for the local market and also export to the Economic Community of West African States (ECOWAS) market of 175 million people, as well as to the developed world but of which various measures have become absolutely necessary to revive the textile industry. At present Nigeria spends over $4 billion, about N1.32 trillion, yearly on imported textile and other ready-made clothings.

The Nigerian textile industry, hitherto the second largest employer after the government, has been bogged down by lack of infrastructure and smuggled textile from Asian countries, especially China.

The Director-General, Nigerian Textile Manufacturers Association (NTMA), Mr. Hamma Kwajaffa, said that despite the prevailing harsh operating environment, the situation is redeemable.

To turn around the industry, the government needs to address the key issues raised by operators in the cotton and textile value chain. This, according to Kwajaffa , is the only way recent initiatives unveiled by government to revive the sector will yield result.

The NTMA said that the influx of smuggled textile into major markets in Kantin Kwari in Kano and Balogun and Oshodi in Lagos, not only undermines the local industry, but also denies Nigerians the opportunity of getting employed.

Worse still is the unbridled importation of fake and substandard textiles into the country deprives the government of revenue, while also draining the country’s precarious foreign exchange reserves.

Kwajaffa noted that other countries are helping their textile industry in many ways due to its high employment potential. Ethiopia has one of the most competitive power tariffs at four US cents/Kwh, which is a fifth of the power cost in Nigeria.

Recently, India, which is the second largest textile producer in the world after China, announced a $1 billion incentive package for the textile and apparel industry to create 10 million jobs in three years.

Kwajaffa hailed the interest shown by the government in reviving the industry by the on-the-spot assessment of textile mills in Lagos by Vice President Yemi Osinbajo, Minister of Industry, Trade and Investment Dr. Okechukwu Enelamah, and Central Bank of Nigeria (CBN) Governor Godwin Emefiele.

The NTMA said that about eight issues were brought to the notice of the government, and that most of the issues for which government intervention was sought are within the ambit of existing policy framework whereas some require new initiatives.

One of the issues, which he said that holds promise of reviving the sector was the re-scheduling of the Cotton, Textile and Garment (CTG) loan facility by the Bank of Industry (BoI) to 10+2 years. Although, government agreed to this, a notification is still awaited for it to be effective.

The other issue, according to Kwajaffa, is the price of gas supplied to the local industry, which is pegged to the American dollar and has not been 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 the international market, he pointed out, arguing that there is the need to review the tariff on gas supplied to the industry in Naira, which should be affordable.

Kwajaffa also identified scarcity of black oil, which has crippled the operations of the textile mills in the north. He said there is need to ensure availability of the fuel oil to the textile mills by way of direct allocation from Kaduna and other refineries.

Also, consistent supply of certified seeds, he added, is required to ensure adequate supply of cotton to the local textile industry. Besides, under the dual exchange rate policy being pursued, he said CBN should allocate Foreign Exchange (forex) at official rate for meeting the need for import of essential raw materials by the textile mills.

There is also a need for the redemption of the huge backlog of unutilised Negotiable Duty Credit Certificates (NDCC’s) in lieu of BoI loan instalment owed by the textile companies.

Kwajaffa identified other issues raised that are agitating the minds of operators to include the need to encourage import substitution through local patronage, and check influx of smuggled goods and step up action against counterfeit textiles, which fake the Nigerian trademarks.

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