The President of the Nigerian Textile Manufacturers Association, Mr. Folorunsho Daniyan, in this interview says the textile industry is in dire strait that demands government to enforce measures that would create favourable operating environment for the sector to thrive once again. Dike Onwuamaeze brings the excerpts:
How will you describe the state of textile industry in Nigeria today?
The state of the textile industry is an unfortunate one. To illustrate and give you the graphic picture of the state we are in today, I will take you back to where we were about 15 years ago. Then, we had about 180 factories but now we have 20 or less that are functioning and most of them are operating below 25 per cent of their installed capacity utilisation. This has already painted the picture of where we are now; that the industry is in dire strait and needs serious surgical operation and assistance from the government and people of goodwill to bounce back.
How did we come to this state?
In my own view, we found ourselves in this problem when Nigeria started liberalising imports into the country to such an extent that anything comes in. Only a few decades ago, the textile industry comes only behind the government in providing direct employment to Nigerians. Then we could boost of about 500,000 jobs coming from the textile industry, but gradually our capacity utilisation and operational factories started dwindling because of unfair competition from imports from Asia and others. We produce fabrics that are 100 per cent cottons, at an average cost of N3, 000 or N4, 000 per six yards. But synthetic textile materials are coming in from Asia at N1000 per six yards. So, there is no competition.
Due to the state of the economy and the take home of ordinary Nigerians there is no gainsaying that they will go for the cheapest thing available to them. So, it is a big problem. So, we need the government, especially the Nigerian Customs Service (NCS) and the Standard Organisation of Nigeria (SON) to wake up to their responsibilities and enforce the laws and standards that are applicable to the country’s textile industries. The SON gives us (local manufacturers) standards that we must meet, but it does not enforce these standards on textile materials imported into the country.
So, there is some double standard in the whole thing.
What is the role of the NCS in all of these?
The NCS unfortunately is not up and doing. If you go to the Katunguri Market in Kano you will see on the average nothing less than 20 truckloads of fabrics coming into that market every day and sometime accompanied by security operatives. But how do they manage to cross the northern border to get into the Kano market? Take a visit to Kano market and you will see that over 90 per cent of the African prints (Ankara materials) sold in the state were smuggled. How do they get across the borders? The customs are paying lip service to its duties.
We have made presentations to the comptroller general of NCS during a meeting in his office some years ago to draw his attention to these things. We also informed him that even some of our intellectual properties are being copied. He said he would get in touch to us but nothing came out of it. We have recommended that Nigeria should borrow a leaf from what Ghana did to combat smuggling of textile materials.
When the textile industry was dying in Ghana, the Ghanaian government set up a special task force to combat textile smuggling. The taskforce was made up of various agencies and its sole purpose was to combat smuggling of textile into Ghana. Now, the textile industry is on the rise again in Ghana.
We must sort out our internal problems; we must sort out the border problems and the importation of fake products because there are lots of copyrighted products in Nigeria’s market currently. A textile company in Nigeria will produce a design; smugglers will take that design to China to fake it and bring an inferior version of the design back to Nigeria. What do you think will remain of the textile industry in Nigeria if we do not correct all these things as we are about commencing the African Continental Free Trade Area (AfCFTA) agreement?
How do you see the textile industry under the AfCFTA regime?
That is what I have just said that we have to solve our internal problems in order to make our textile competitive. We have to take the Rule of Origin seriously. Infrastructure is a major problem. You will pay about N2 million for a truck to move your raw materials from Apapa ports to Ikorodu. Where do you begin to compete? You are lucky to get your raw materials out of the Apapa ports within six months. This affects all the industries and not just the textile companies.
Two, the road networks are horrible. There is the issue of power. We are lucky here in the south to enjoy an improvement in gas pricing for the textile industry. But it is a nightmare to our members who operate textile factories and associated companies in northern Nigeria.
Why the nightmare?
The cost of diesel has been deregulated. Black oil is not available. Gas is not available. To compound their problems further, there is a disparity between what the DISCOs charge for electricity in the south compared to what they charge in the north. They charge higher rate in the north. These are the complaints from our members and we have escalated them trying to get answers. But nobody has told us anything. For us to be competitive in the AfCFTA, we have to tidy up our internal issues. If we do not tidy up our internal issues there is no way we are going to compete with other countries. We should have learnt some lessons from our ECOWAS experience where ports in neighbouring countries became dumping grounds for goods meant for Nigerian markets. These are problems we are going to contend with on a larger scale under AfCFTA. So, we have to get our border control right. We have to do something about our sources of energy and road networks. Luckily now it is not all gloom. The government is doing a lot on rail. There is rail transportation between the north and south. That is a good omen. We commend the government for that effort and encourage it to see that it is completed.
What is the impact of the CBN intervention on textile industry?
The intervention fund, as far as we can see, has been helpful to a large extent. The CBN is trying in its own way. It has done quite a lot about cotton production. But it still needs to do a bit more for the textile manufacturers. Sometimes, the CBN intervenes and gives us facilities; it is like refinancing our debts. Yes they give us loans and we have more money to do some things. But these interventions will come to naught if we do not correct the anomalies in the Nigerian markets, especially smuggling and infrastructure.
The CBN at a time provided money for cotton production?
Yes. The CBN has done much on cotton production. There is cotton but the problem is that locally produced cotton is more expensive. We have to look into its pricing. But this is not enough to take away the fact that CBN Governor, Mr. Godwin Emefiele, has been doing a lot for us. He has passion for the survival of Nigerian textile industry. I will give him that credit.
There was a directive that all the uniformed agencies in the country should be buying their uniforms from local textile mills?
Thank you. That is a very good one. You would have noticed that I chuckled when you asked this question. The fact is that none of the agencies has purchased a meter of cloth from the Nigerian textile manufacturers. It was only during the COVID-19 period that a little quantity was purchased from our members. Since then, nothing has been done. The NYSC was the only agency that tried to do something with us. But what is it that is stopping the Nigerian government from insisting that our armed forces, our police, and the customs etc., must patronise locally made fabrics? Kenya did it and is not regretting today. If they say that our quality is not good then we will upgraded. Another worrisome example is about one of our member in Zaria, the Zaria Industries. It produces tarpaulin of the highest quality that meet the military’s needs but they would not buy from the industry. The military would rather import them. Why?
It could be that the prices are higher?
Nobody has told us what is wrong. We have met the quality. They have demonstrated it. You know that the military operations require tarpaulin and canvas that will not absorb too much heat in order to be conducive for their operations. All these have been tested. The one being imported from Egypt or elsewhere is not as good as the one produced by the Zaria Industries. Why the preference to buy from outside the country?
How do you contend with foreign exchange?
Early this year, the CBN sent a consultant to discuss with the textile industry and find out our problems and the areas we needed interventions. Part of the things we told the consultant is to create a window for the textile industry to access FX. We appealed that the CBN should look into this aspect of our request.
What are the chances of attracting investments into the sector?
The question to be asked is why are new investors not coming into the Nigerian textile sector? It is because the enabling environment is not there. Are they coming just to sink billions of naira to establish factories when the challenges in the local market have not been sorted out?
Investors will come once the enabling environment is created. Money goes to where it will yield returns and not to where it will sink. That new investors are not coming in is a marker that some things are wrong with the country’s textile industry.
Had there been new entrants into the sector in the last 10 years?
There has been no new entrant. All we have seen were motion without movements. We are not against new investors coming in but not for them to ask for 10 years special package to bring in semi-finished products.
Why is the NCS lethargic?
That question should best be asked the Comptroller General of the NCS to tell us why policing the borders is a difficult job to do.
Have you called the attention of the Presidency that Executive Order 003 has not been executed?
We have made several representations through the CBN asking them to help intervene. We had a meeting with the President in 2019 and these were brought to his attention.
How do you see the future in the next 20 years?
The future of the Nigerian textile industry depends on the will power of the government to protect it. The potentials are here. The basic raw materials are here. Experienced workforce is here. The projection we have is that if smuggling is curtailed by as much as 10 per cent about 30 per cent of textile companies will come back to operation and capacity utilisation will go up. The fate of the industry is in the hand of government because if the government will breathe down on the NCS something will happen.