Nigerians await latest attempt at textile industry revamp amidst FG’s $3.5bn intervention pledge

Onome Amuge

The Nigerian textile industry, once a cornerstone of the country’s economic strength, has suffered a steady decline over the years, leading to an undeniable contraction in its contribution to the country’s GDP. This implosion has seen the industry shrink from its position as a major wealth creator in the 1980s to a shadow of its former self, struggling to compete in a changing market and crying out for intervention and support.

Meanwhile, in a promise that is familiar to many Nigerians, the President Bola Tinubu administration has pledged to revitalise the country’s struggling textile industry, buoyed with a $3.5 billion injection of funds.

While this commitment may sound encouraging, analysts opine that the ambitious promise, while stirring optimism among many, bears a striking resemblance to pledges made by past governments, whose bold words failed to yield real change.

Doris Uzoka-Anite, the minister of industry, trade, and investment, in her sectoral report on President Bola Tinubu’s first year in office,announced that the government has secured $3.5 billion to resuscicate the country’s cotton, textile and apparel industry.

According to the Minister, the government has been working hand-in-hand with various development partners and private sector players to ensure the optimal performance of the Nigerian cotton, textile, and apparel industry, which has faced significant challenges in recent years.

“So far, we have attracted $3.5 billion to unlock the textile quality apparel industry. As you know, Nigeria’s textile and apparel industry covers the entire clothing value chain and has a strong potential for growth, availability of cotton and the country’s largest market size,” Uzoka-Anite said.

Speaking on the potential of the textile and apparel industry, Minister Uzoka-Anite stated that this sector holds a vital position in the manufacturing sector and has the capacity to generate a significant number of jobs for both skilled and unskilled labor. In addition to employment opportunities, the minister highlighted that the industry can generate export earnings and attract foreign direct investment, which can help reduce poverty in the country.

Vice President Kashim Shettima’s recent engagement with the International Cotton Advisory Committee (ICAC) delegation saw him voicing support for the revival of Nigeria’s cotton and textile industry, which he believes has the potential to create 1.4 million jobs annually by leveraging the full potential of the cotton value chain.

Therefore, Shettima urged stakeholders to develop a concrete roadmap for the revitalisation of the cotton and textile sector in Nigeria.

The vice president further assured the delegation that the government would make deliberate efforts to leverage the country’s cotton value chain opportunities to boost the sector’s growth and development.

According to Shettima, these efforts will pave the way for Nigeria to regain its membership in the ICAC, providing the country with access to valuable technical support and resources to support the industry’s revitalisation.

With the Nigerian textile industry in a prolonged decline, the government’s most recent pledge to revive the sector has elicited a response that is a delicate balance of cautious optimism and doubt among the country’s populace.

According to reports, the attempts to revive the Nigerian textile industry over the past two decades have been fraught with empty promises and unfulfilled plans, leaving many to wonder where billions of naira in funding has disappeared.

Reports have also highlighted how previous administrations under Presidents Goodluck Jonathan and Muhammadu Buhari announced plans to revitalise the sector, with billions of naira allocated for this purpose.

In 2020, during the Muhammadu Buhari administration, the CBN announced a N50 billion special mechanism fund to revive the struggling textile industry. Administered by the Bank of Industry (BOI) at a 4.5 percent interest rate, the fund aimed to provide support for various initiatives within the sector through CBN-approved non-interest instruments. The guidelines for the intervention were issued in a statement signed by Kelvin Amugo, the then CBN director of the financial policy and regulation department.

Despite multiple attempts by the Nigerian government to resuscitate the local textile industry through the injection of over N500 billion ($1.18 billion) in public funds over the past 30 years, approximately 120 textile companies have closed their doors.

According to publicly available information from government institutions such as the CBN, the government has floated a series of funding schemes with the aim of saving the domestic textile sector. However, it appears that these initiatives have not been successful, as evidenced by the high number of textile companies that have ceased operations.

Thus, the Nigerian textile industry has remained on life support, leading many to question whether the current government will be able to succeed where its predecessors have failed.

The importation of textiles has seen a steady rise in value in recent years, undermining the local textile industry’s efforts to regain its foothold. While textile imports stood at N182.5 billion in 2020, the figures rose to N278.8 billion in 2021 and then jumped to N365.5 billion in 2022, reaching N377.1 billion in 2023.

Consequently, the textile industry’s contribution to Nigeria’s gross domestic product (GDP) has been on a decline over the past few years, reflecting the sector’s struggle to regain its footing.

As reported by the NBS, the sector’s contribution to real GDP in 2020 was 1.9 percent at N1.332 trillion, dropping to 1.82 percent in 2021 at N1.315 trillion, 1.72 percent in 2022 at N1.286 trillion, and further to 1.63 percent in 2023 at N1.247 trillion.

The textile sector also registered a negative contribution to the country’s GDP over the past two quarters. According to the NBS, the sector’s contribution to the GDP stood at -1.75 percent in Q1’24 with an economic value of N324,094.03 billion, and declined further to -1.96 percent with a value of N265,624.81 billion in Q2’24.

Faced with the declining state of the textile industry, the National Union of Textile Garment and Tailoring Workers of Nigeria (NUTGTWN) made an appeal to President Tinubu. The union requested the president to create an enabling environment that encourages business growth, as well as implement macroeconomic policies and industrial strategies that promote manufacturing, value addition, and job creation.

John Adaji, the union’s president, addressed the crucial role of the textile industry in Nigeria’s economic development during the 13th Quadrennial National Delegates Conference in Abuja. In his speech, Adaji emphasised the potential of the manufacturing sector in shaping the country’s future and the continent’s as a whole.

He highlighted that reviving the textile industry will position Nigeria to capitalise on trade agreements like the Africa Continental Free Trade Area (AfCFTA) worth an estimated  $3 trillion and the United States’ Africa Growth and Opportunity Act (AGOA), which could generate trillions of dollars in revenue.

“We commend the determination of Nigeria’s President Bola Ahmed Tinubu to change the narrative of the nation’s manufacturing sector and create mass decent jobs through sustainable industrialization. This requires committed action on the part of government, employers and workers.

“Our hope is that President Tinubu will take all necessary measures to ensure friendly business environment, stable macro-economic policy, consistent, clear and focused industrial strategy that will provide support and incentives for manufacturing activities, ensure value addition and decent job creation in the country,” he stated.

Adaji, in his assessment of the industry, noted that despite the union’s consistent efforts to advocate for the revival of the cotton, textile, and garment industry, the Nigerian government’s interest in supporting the sector has not translated into effective policy implementation.

The NUTGTWN president stressed that there is a significant gap between policy pronouncements and the actual implementation of these policies, which has hindered the industry’s growth and development.

Adaji expressed concern over the diminishing capacity of Nigeria’s textile industry, which he attributed to the large-scale job losses caused by the industry’s decline.

According to him, this has led to a significant increase in the pool of unemployed Nigerians and subsequently, high poverty levels and increased crime rates.

He also pointed out that the textile industry’s decline has not only affected the people directly involved in the sector but has also had a negative impact on the country’s economic and social well-being, as a whole.

“Today, the cotton, textile and garment sub-sector of the economy which used to be the second largest employer of labour after the public sector is on steady decline due to company closures and massive loss of jobs. Unrestrained smuggling and importation of textile products have become the order of the day,” he stated.

Adaji underscored that if the cotton, textile, and garment industry were to be revived, it could serve as a powerful engine for Nigeria’s economic transformation. He posited that the sector could create over two million jobs, increase the country’s internally generated revenue, reduce the $4 billion annual textile and apparel import bill, and earn significant foreign exchange for Nigeria.