Nigeria’s once-thriving textile industry is now gasping for breath due to a combination of failed revival measures, a persistent increase in textile imports, and a series of adverse monetary policies.
The sector, which once boasted of a robust manufacturing base, is currently grappling with near collapse.
Historical Context and Decline
Nigeria’s textile industry was a significant contributor to the nation’s Gross Domestic Product (GDP) and employment in the manufacturing sector from the 1970s to the 1990s.
At its peak around 1990, the sector had about 180 textile mills employing over one million workers and supported a vast cotton production value chain.
However, by 2005, the industry began to decline. According to Financial Vanguard, only about five textile mills remain operational today, and the labour force has dwindled to less than 2,000.
The cotton production value chain has also vanished, contributing to the industry’s downturn despite the growing market size due to Nigeria’s rising population.
Challenges and Smuggling
Industry stakeholders attribute the collapse to several factors, including large-scale smuggling and importation, inconsistent government policies on tariffs, inadequate power supply, insecurity in cotton production regions, foreign exchange crises, and high funding costs.
These challenges have rendered local textile products uncompetitive against cheaper imports.
Failed Revival Efforts
Despite various federal government initiatives aimed at reviving the sector, such as financial support and foreign exchange restrictions on textile imports by the Central Bank of Nigeria (CBN), these measures have not significantly boosted local production.
Import Surge
Data from the National Bureau of Statistics (NBS) reveals a steady rise in textile imports from 2019 to 2023. Total textile trade during this period amounted to N1.5 trillion, with imports accounting for N1.4 trillion (96.5%) and exports just N50.7 billion (3.5%), indicating a significant trade deficit.
Notably, import values rose from N220.5 billion in 2019 to N377.1 billion in 2023, while exports, mostly cotton and apparel, remained minimal.
Underwhelming Performance
The sector’s contribution to Nigeria’s real GDP has been on a consistent decline. NBS data shows the textile sector’s GDP contribution dropped from 2.02% in 2019 to 1.63% in 2023. In Q1 2024, the sector contributed a negative 1.75% to GDP, making it one of the country’s underperforming sectors.
Chinese Infiltration
There has been significant Chinese infiltration into the Nigerian textile market, particularly with the importation of adulterated Adire (locally made tie and dye) fabrics, known as “Adire Chinese.” These counterfeit products are cheaper and have become an attractive option for consumers, further harming local producers.
Government and Industry Reactions
In response to the challenges, the Ogun State government has initiated moves to tackle the influx of adulterated Adire fabrics. State Commissioner for Culture and Tourism, Sesan Fagbayi, disclosed efforts to ban these counterfeit products through legislative measures at both the state and federal levels.
The Manufacturers Association of Nigeria (MAN) has criticized the CBN’s tight monetary policy, which they argue reduces the competitive capacity of Nigerian products.
MAN Director General, Segun Ajayi-Kadir, emphasized the need for structural reforms and the enforcement of Executive Order 003 to boost local production.
Potential Solutions
Ajayi-Kadir advocates for reducing import dependency, addressing structural constraints, and promoting local production through backward integration.
He also called for the full implementation of Executive Order 003, which mandates government entities to prioritize locally produced goods.
Government Initiatives
The Federal Government, in collaboration with development partners and the private sector, is working to rejuvenate the cotton, textile, and apparel industry. Minister of Industry, Trade and Investment, Doris Uzoka-Anite, announced plans to attract $3.5 billion in investments to revamp the sector.
A new partnership with Afreximbank aims to establish a $3.3 billion Nigeria Industrialisation Financing Facility, expected to create 20,000 jobs and boost the textile value chain.
