Governor
of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele is about
taking the bull by the horn in the resolve to revive the textile
industry. Already, skeptics are saying it is impossible. But Emefiele
has disclosed that the president is involved.
He said: “Mr. President is committed to the rejuvenation and revival of this sector and he is desirous of bringing this industry back to life.”
The question is, why is there so much doubt about reviving the sector? What brought an industry with well over 159 vibrant textile mills operating at close to full production capacities to its knees within a couple of years? Why hasn’t earlier efforts returned the industry to its glory days? What went wrong and when?
It was in search of answers to these germane questions that the CBN governor flew down to Lagos last week. Lagos was the centre where he transversed many years ago as a credit manager appraising loan requests for textile companies. “As a credit manager, it was a race against time, as if you didn’t have a textile company in your loan portfolio you were deemed to have underperformed,” he recalled with nostalgia.
These days, Emefiele said: “As I drive past these factory locations, I shudder with sadness at the abandoned and dilapidated structures. Indeed many of the premises have been leased or sold to other companies, who are involved in importation of various commodities like rice, tomatoes, textile, diary products and even automobiles.”
With this kind of disappointing situation in mind and finding himself in a position to effect a change, most analysts are hopeful that Emefiele, as CBN’s helmsman, will make good his promise to run a CBN that will support the revitalisation of critical sectors in the economy as well as to promote locally made goods. Thus the Central Bank of Nigeria on Friday initiated a meeting that is hoped would lead to the revival of the country’s ailing textile industry.
What went wrong in textile industry
First to identify what happened to the textile industry was the president of Textile, Garment Manufacturers Association, Mrs Grace Adereti.
In her words: “The problem started with with counterfeiting of our products. We complained to relevant authorities like the Standards Organization of Nigeria (SON), but nothing serious was done. The government does not patronize us.”
As such, the industry which created over 18 million direct or indirect employment opportunities with over 150 vibrant mills in the past, could only boost of less than 20 textile companies, still managing to stay afloat.
She said that the industry was in coma because 95 per cent of textile products were imported, adding that 150 containers of textile materials are smuggled into the country in one night on daily basis, even when the country has the capacity of producing 1.5 billion metre of cotton.
Adereti did not mince words that CTG companies began to feel the pinch of the rather unstable political environment, policy somersaults, massive and unfettered smuggling of substandard Asian products into the country, high production costs due to obsolete machineries, low level technologies and poor state of the country’s infrastructure, especially power.
Others who spoke at the stakeholders’ meeting also agreed with her, but added that without ban on importation and smuggling, no remedy will save the textile industry.
This conformed with the position of most analysts who believed that the sector became “a mere shadow of themselves” due to the influx of cheap textile materials into Nigeria and because of inconsistent government policies. In particular, textile companies had been caught in the grips of policy somersault, unstable political situation, high taxes and levies, manufacturing sector’s near-collapse generally with poor infrastructure leading to high production costs, rising taste for foreign products, smuggling and more.
The issue of counterfeiting has earlier been identified by Managing Director, Grand Oak Limited, Mr Akshay Kumar, at a separate interview. Impact of adulterated products, according to him, is negative because faking is a very serious problem in this country.
“It is evident in the concern being expressed by the government. The regulatory agencies like the Standards Organisation of Nigeria (SON) and NAFDAC are concerned about the fact that so much faking happens in this country. It happens in the pharmaceutical business, it happens in mattresses, which is why there is a mattress company, which tells you before you buy their mattress, you should send a text to find out if it is genuine or not. So the issue of faking is a very serious issue,” he said.
President of the National Union of Textile, Garment and Tailoring Workers of Nigeria (NUTGTWN), Mr. Oladele Hunsu, in a separate interview regretted that before now, there were some degrees of smuggling activities, there were all manner of clothings coming into the country through smuggling, unchecked. “When last did you hear of men of the Customs Service seizing clothes in Nigeria? Go to Oshodi Market, Balogun Market and others; most of the materials you see there are coming from Asian countries such as China, Malaysia and others and these have further made the industry to be worse despite the intervention of the Federal Government.
“You are all aware that they promised to bring in money to bail out the industry. As I speak to you now, I can say that the fund has not helped matters because there are other factors of production that have not been taken care of. For instance, you talk of electricity, what is the electricity level now in Nigeria? It is abysmally low and no country can run under this kind of electricity. There are some employers that are crying because of the cost of buying diesel to power their generating set to operate their equipment and it is uneconomical. You see a factory spending about N60 million to power their machines and this money could have gone into other factors of production. So, the textile industry is not there yet. I can say we are stagnated. We have not recorded any significant improvement in the industry. We just hope that the new administration would bring in fresh air into the industry,” he lamented.
Mr Emefiele, who interjected at intervals during the meeting with cotton, textile and garment industry stakeholders in Lagos, agreed that indeed, these problems that had stunted the contribution of the textile industry to Nigeria’s growth were far beyond funding. He also disclosed that he recently met with the Comptroller-General of the Nigeria Customs, as part of a collaboration to tackle smuggling of textile goods.
According to Emefiele, it was disheartening that an industry that literally touched the fabric of the entire country now pales in the shadow of its past success. But be that as it may, he said the central bank would provide single-digit interest rate and long-tenored loans to operators in the industry.
Next to speak was the General Secretary, National Union of Textile Garment and Tailoring Workers of Nigeria (NUTGTW) Comrade Issa Aremu,. He believes that what should be done is to ask what “we were doing in the glory days, and what we are doing now.” He told Emefiele that he has listened to president Buhari speak of textile industry revival and sees a synergy of ideas between the governor and the president. He reminded stakeholders that “ if we revive these industries, we will be surprised the kind of jobs we will create.” It is estimated that the revival of textile industries will lead to the employment of over 400,000 workers.
Stating that industrialization is strategic to reducing the high unemployment rate in the country, he praised branded Emefiele a comrade governor for commencing plans to revive the textile and garment industry.
Aremu said it was commendable that Buhari had directed the inauguration of a special committee to look into the revival of the cotton and textile industry.
He said: “Labour demands that the revival committee be inclusive of all the stakeholders, including the sector’s labour unions and employers’ associations.
Role of funding
Emefiele admitted that challenges facing the industry is beyond just funding. This position is correct because at interest rate of six per cent and a repayment period of five years, operators in the textile industry ought to be falling over themselves to access the earlier provision of N100 billion Cotton, Textile, and Garment (CTG) Revival Fund. But this has not been the case.
The CBN boss explained that the relationship between banks and the textile companies was thorny because the former were suddenly left with huge non-performing loans after the bubble burst.
The Bank of Industry said about 60 billion of the CTG fund has been disbursed to various beneficiaries under the scheme but it is evident that results are not there.
The banks available records show that over 60 per cent has been committed to 52 companies in the Cotton, Textile and Garment Industry as at March, 2013. The re-opening of United Nigeria Textiles Limited in Kaduna is one of the numerous positive impacts of this scheme, it said.
A mid-term evaluation of the CTG industry commissioned by BoI/UNIDO to evaluate the impact of the scheme reveals that: “Over 8,070 jobs had been saved through the intervention, adding that capacity utilization for most beneficiaries has increased from below 40 per cent to about 61 per cent at the time over 50 per cent of those making losses has started reporting profits.
Despite these impressive statistics, most operators told Nigerian Tribune that
those who took the loan got their fingers burnt when they discovered, shortly after accessing the loan, that over 80 per cent of the market has been taken over by cheap imports from Asian countries. According to them, the influx of foreign textiles into the country made locally produced textiles less competitive, as they are often costlier than imported or smuggled ones.
“The central bank under my leadership is prescribing to work with the industry to come up with holistic solutions for the long-term sustainable development of the sector. I can assure you that the Bank is ready to provide funding under our Real Sector Support Facility for the industry.
“This in my humble opinion is the crux of this meeting, which I will like us to keenly deliberate upon. How for instance, can we get cotton farmers to increase their output, reducing dependency on imports? Or how can all stakeholders form a strong advocacy to create a more enabling environment for the sector to thrive once again? I am confident that with our collective efforts, we can finally change the sad narrative about this industry,” he added.
Law enforcement
Some law enforcement agencies that were once directed to leave the ports have gradually returned, yet smuggling remains a problem. Though the CBN governor may have discussed with the Controller-General of Customs, there are other agencies that should complement the Customs. Prior to the time the order came to vacate the ports, agencies at the seaports were; the State Security Service, SON, National Agency for Food and Drug Administration and Control, Directorate of Naval Intelligence, National Drug Law Enforcement Agency, Federal Environmental Protection Agency, the Port Police alongside its Bomb Disposal Unit; Plant Quarantine with Veterinary Quarantine; Nigerian Immigration Service, Port Health; Nigeria Customs Service, Nigerian Ports Authority and the Nigerian Maritime Administration and Safety Agency.
Beyond laminating that a sub-sector that once employed over one million hardworking Nigerians is now almost completely dominated by imports from Asia, is the truth that there must be a way of fighting the monster called importation.
India alone estimated to export textile products worth over $140 million into Nigeria, while imports from China, Indonesia and Taiwan are more likely to be even much higher. The challenge for us as stakeholders according to Emefiele is how to prevent further dumping of the product into the country with the implementation of the Common External Tariff.
“We are all aware of the challenges that have beset and continue to plague the industry and I am under no illusion that this meeting will immediately resolve these issues.
Possible solution
Before the industry stakeholders went into a technical session of the meeting, Emefiele said the Central Bank was working out modalities with the Kaduna State government on providing off-grid power solutions for more efficient energy supply. However, despite he believes that the success of this project will resuscitate the mills in the ‘Textile City of Kaduna,’ industry stakeholders want other structural challenges to be put into consideration in order to serve as a catalyst to the revival of textile industry. They are logistics, road network, security, tax incentives, low interest long tenored loans, among others.
He said: “Mr. President is committed to the rejuvenation and revival of this sector and he is desirous of bringing this industry back to life.”
The question is, why is there so much doubt about reviving the sector? What brought an industry with well over 159 vibrant textile mills operating at close to full production capacities to its knees within a couple of years? Why hasn’t earlier efforts returned the industry to its glory days? What went wrong and when?
It was in search of answers to these germane questions that the CBN governor flew down to Lagos last week. Lagos was the centre where he transversed many years ago as a credit manager appraising loan requests for textile companies. “As a credit manager, it was a race against time, as if you didn’t have a textile company in your loan portfolio you were deemed to have underperformed,” he recalled with nostalgia.
These days, Emefiele said: “As I drive past these factory locations, I shudder with sadness at the abandoned and dilapidated structures. Indeed many of the premises have been leased or sold to other companies, who are involved in importation of various commodities like rice, tomatoes, textile, diary products and even automobiles.”
With this kind of disappointing situation in mind and finding himself in a position to effect a change, most analysts are hopeful that Emefiele, as CBN’s helmsman, will make good his promise to run a CBN that will support the revitalisation of critical sectors in the economy as well as to promote locally made goods. Thus the Central Bank of Nigeria on Friday initiated a meeting that is hoped would lead to the revival of the country’s ailing textile industry.
What went wrong in textile industry
First to identify what happened to the textile industry was the president of Textile, Garment Manufacturers Association, Mrs Grace Adereti.
In her words: “The problem started with with counterfeiting of our products. We complained to relevant authorities like the Standards Organization of Nigeria (SON), but nothing serious was done. The government does not patronize us.”
As such, the industry which created over 18 million direct or indirect employment opportunities with over 150 vibrant mills in the past, could only boost of less than 20 textile companies, still managing to stay afloat.
She said that the industry was in coma because 95 per cent of textile products were imported, adding that 150 containers of textile materials are smuggled into the country in one night on daily basis, even when the country has the capacity of producing 1.5 billion metre of cotton.
Adereti did not mince words that CTG companies began to feel the pinch of the rather unstable political environment, policy somersaults, massive and unfettered smuggling of substandard Asian products into the country, high production costs due to obsolete machineries, low level technologies and poor state of the country’s infrastructure, especially power.
Others who spoke at the stakeholders’ meeting also agreed with her, but added that without ban on importation and smuggling, no remedy will save the textile industry.
This conformed with the position of most analysts who believed that the sector became “a mere shadow of themselves” due to the influx of cheap textile materials into Nigeria and because of inconsistent government policies. In particular, textile companies had been caught in the grips of policy somersault, unstable political situation, high taxes and levies, manufacturing sector’s near-collapse generally with poor infrastructure leading to high production costs, rising taste for foreign products, smuggling and more.
The issue of counterfeiting has earlier been identified by Managing Director, Grand Oak Limited, Mr Akshay Kumar, at a separate interview. Impact of adulterated products, according to him, is negative because faking is a very serious problem in this country.
“It is evident in the concern being expressed by the government. The regulatory agencies like the Standards Organisation of Nigeria (SON) and NAFDAC are concerned about the fact that so much faking happens in this country. It happens in the pharmaceutical business, it happens in mattresses, which is why there is a mattress company, which tells you before you buy their mattress, you should send a text to find out if it is genuine or not. So the issue of faking is a very serious issue,” he said.
President of the National Union of Textile, Garment and Tailoring Workers of Nigeria (NUTGTWN), Mr. Oladele Hunsu, in a separate interview regretted that before now, there were some degrees of smuggling activities, there were all manner of clothings coming into the country through smuggling, unchecked. “When last did you hear of men of the Customs Service seizing clothes in Nigeria? Go to Oshodi Market, Balogun Market and others; most of the materials you see there are coming from Asian countries such as China, Malaysia and others and these have further made the industry to be worse despite the intervention of the Federal Government.
“You are all aware that they promised to bring in money to bail out the industry. As I speak to you now, I can say that the fund has not helped matters because there are other factors of production that have not been taken care of. For instance, you talk of electricity, what is the electricity level now in Nigeria? It is abysmally low and no country can run under this kind of electricity. There are some employers that are crying because of the cost of buying diesel to power their generating set to operate their equipment and it is uneconomical. You see a factory spending about N60 million to power their machines and this money could have gone into other factors of production. So, the textile industry is not there yet. I can say we are stagnated. We have not recorded any significant improvement in the industry. We just hope that the new administration would bring in fresh air into the industry,” he lamented.
Mr Emefiele, who interjected at intervals during the meeting with cotton, textile and garment industry stakeholders in Lagos, agreed that indeed, these problems that had stunted the contribution of the textile industry to Nigeria’s growth were far beyond funding. He also disclosed that he recently met with the Comptroller-General of the Nigeria Customs, as part of a collaboration to tackle smuggling of textile goods.
According to Emefiele, it was disheartening that an industry that literally touched the fabric of the entire country now pales in the shadow of its past success. But be that as it may, he said the central bank would provide single-digit interest rate and long-tenored loans to operators in the industry.
Next to speak was the General Secretary, National Union of Textile Garment and Tailoring Workers of Nigeria (NUTGTW) Comrade Issa Aremu,. He believes that what should be done is to ask what “we were doing in the glory days, and what we are doing now.” He told Emefiele that he has listened to president Buhari speak of textile industry revival and sees a synergy of ideas between the governor and the president. He reminded stakeholders that “ if we revive these industries, we will be surprised the kind of jobs we will create.” It is estimated that the revival of textile industries will lead to the employment of over 400,000 workers.
Stating that industrialization is strategic to reducing the high unemployment rate in the country, he praised branded Emefiele a comrade governor for commencing plans to revive the textile and garment industry.
Aremu said it was commendable that Buhari had directed the inauguration of a special committee to look into the revival of the cotton and textile industry.
He said: “Labour demands that the revival committee be inclusive of all the stakeholders, including the sector’s labour unions and employers’ associations.
Role of funding
Emefiele admitted that challenges facing the industry is beyond just funding. This position is correct because at interest rate of six per cent and a repayment period of five years, operators in the textile industry ought to be falling over themselves to access the earlier provision of N100 billion Cotton, Textile, and Garment (CTG) Revival Fund. But this has not been the case.
The CBN boss explained that the relationship between banks and the textile companies was thorny because the former were suddenly left with huge non-performing loans after the bubble burst.
The Bank of Industry said about 60 billion of the CTG fund has been disbursed to various beneficiaries under the scheme but it is evident that results are not there.
The banks available records show that over 60 per cent has been committed to 52 companies in the Cotton, Textile and Garment Industry as at March, 2013. The re-opening of United Nigeria Textiles Limited in Kaduna is one of the numerous positive impacts of this scheme, it said.
A mid-term evaluation of the CTG industry commissioned by BoI/UNIDO to evaluate the impact of the scheme reveals that: “Over 8,070 jobs had been saved through the intervention, adding that capacity utilization for most beneficiaries has increased from below 40 per cent to about 61 per cent at the time over 50 per cent of those making losses has started reporting profits.
Despite these impressive statistics, most operators told Nigerian Tribune that
those who took the loan got their fingers burnt when they discovered, shortly after accessing the loan, that over 80 per cent of the market has been taken over by cheap imports from Asian countries. According to them, the influx of foreign textiles into the country made locally produced textiles less competitive, as they are often costlier than imported or smuggled ones.
“The central bank under my leadership is prescribing to work with the industry to come up with holistic solutions for the long-term sustainable development of the sector. I can assure you that the Bank is ready to provide funding under our Real Sector Support Facility for the industry.
“This in my humble opinion is the crux of this meeting, which I will like us to keenly deliberate upon. How for instance, can we get cotton farmers to increase their output, reducing dependency on imports? Or how can all stakeholders form a strong advocacy to create a more enabling environment for the sector to thrive once again? I am confident that with our collective efforts, we can finally change the sad narrative about this industry,” he added.
Law enforcement
Some law enforcement agencies that were once directed to leave the ports have gradually returned, yet smuggling remains a problem. Though the CBN governor may have discussed with the Controller-General of Customs, there are other agencies that should complement the Customs. Prior to the time the order came to vacate the ports, agencies at the seaports were; the State Security Service, SON, National Agency for Food and Drug Administration and Control, Directorate of Naval Intelligence, National Drug Law Enforcement Agency, Federal Environmental Protection Agency, the Port Police alongside its Bomb Disposal Unit; Plant Quarantine with Veterinary Quarantine; Nigerian Immigration Service, Port Health; Nigeria Customs Service, Nigerian Ports Authority and the Nigerian Maritime Administration and Safety Agency.
Beyond laminating that a sub-sector that once employed over one million hardworking Nigerians is now almost completely dominated by imports from Asia, is the truth that there must be a way of fighting the monster called importation.
India alone estimated to export textile products worth over $140 million into Nigeria, while imports from China, Indonesia and Taiwan are more likely to be even much higher. The challenge for us as stakeholders according to Emefiele is how to prevent further dumping of the product into the country with the implementation of the Common External Tariff.
“We are all aware of the challenges that have beset and continue to plague the industry and I am under no illusion that this meeting will immediately resolve these issues.
Possible solution
Before the industry stakeholders went into a technical session of the meeting, Emefiele said the Central Bank was working out modalities with the Kaduna State government on providing off-grid power solutions for more efficient energy supply. However, despite he believes that the success of this project will resuscitate the mills in the ‘Textile City of Kaduna,’ industry stakeholders want other structural challenges to be put into consideration in order to serve as a catalyst to the revival of textile industry. They are logistics, road network, security, tax incentives, low interest long tenored loans, among others.
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